Exhibit 10.42
EXECUTION DRAFT
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of December 30, 1998 among POLYVISION
CORPORATION, a corporation duly organized and validly existing under the laws of
the State of New York (the "ISSUER"), and XXXX XXXXXXX MUTUAL LIFE INSURANCE
COMPANY ("XXXXXXX,"), XXXX XXXXXXX VARIABLE LIFE INSURANCE COMPANY ("VARIABLE")
and XXXXXXX MEZZANINE PARTNERS L.P. ("MEZZANINE" and together with Xxxxxxx and
Variable and their respective successors and assigns, the "INVESTORS").
W I T N E S S E T H
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WHEREAS, the Issuer and the Investors have entered into a Senior
Subordinated Note and Warrant Purchase Agreement of even date herewith (as
amended, modified, supplemented or restated and as in effect from time to time,
the "NOTE AGREEMENT"), pursuant to which the Investors have agreed, subject to
the terms and conditions thereof, to purchase from the Issuer $25,000,000 in
aggregate principal amount of the Issuer's 12.5% Senior Subordinated Notes due
2006 (the "NOTES"); and
WHEREAS, to induce the Investors to enter into the Note Agreement and
purchase the Notes pursuant to the terms thereof, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Issuer has agreed to issue the Warrants (as hereinafter
defined) to the Investors providing for the purchase of shares of Common Stock
(as hereinafter defined) of the Issuer in the manner hereinafter provided.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; ACCOUNTING TERMS AND DETERMINATIONS.
1.01 DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 1 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and vice versa):
"AFFILIATE" shall mean, as to any Person (the "RELEVANT PERSON"), any
other Person that directly or indirectly controls, or is under common control
with, or is controlled by, the Relevant Person and, if such Person is an
individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled by any such member or trust. As used in this Agreement, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of
the power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), PROVIDED THAT, in any event, any Person that owns or has
the right to acquire directly or indirectly (including as part of a group) 10%
or more of the Voting Capital Stock in a corporation or 10% or more of
partnership or other ownership interests of any other Person, other than as a
limited partner or nonmanaging member of such other Person, will be deemed to
control such corporation or other Person. Notwithstanding the foregoing, (a) no
individual shall be deemed to be an Affiliate of a Relevant Person solely by
reason of his or her being an employee of such Relevant Person or any
Subsidiary, and (b) neither the Investors nor any bank, bank holding company or
subsidiary shall be an Affiliate of the Issuer or any Subsidiary.
"ARTICLES OF INCORPORATION" shall mean the Issuer's certificate of
incorporation as amended and restated from time to time to the extent permitted
under this Agreement.
"BOARD" shall mean the Board of Directors of the Issuer.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other similar or successor agency of the Federal government administering the
Securities Act and/or the Exchange Act.
"COMMON STOCK" shall mean the Issuer's authorized Common Stock, par
value $.001 per share, as constituted on the Issue Date and any stock into which
such Common Stock may thereafter be converted or changed, and also shall include
any other stock of the Issuer of any other class, which is not preferred as to
dividends or assets over any other class of any other stock of the Issuer.
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness, shares
of stock or other securities or rights which are exchangeable for or exercisable
or convertible into a specified security of the Issuer either immediately or
upon the occurrence of a specified date or event.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"EXPIRATION DATE" shall have the meaning assigned to such term in the
Warrants.
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned
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or controlled (whether through ownership of securities or other ownership
interests, by contract or otherwise) by any of the foregoing.
"HOLDER" shall mean any Person who acquires Warrants or Warrant Stock
pursuant to the provisions of this Agreement, including any transferees of
Warrants or Warrant Stock; PROVIDED, HOWEVER, that a holder of Warrant Stock
purchased pursuant to an effective registration statement or in an ordinary
brokerage transaction pursuant to Rule 144 shall not be deemed a Holder.
"INCLUDE" and "INCLUDING" shall be construed as if followed by the
phrase "without being limited to."
"INDEBTEDNESS" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business; (c) Indebtedness of others secured
by a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for the account of such Person; (e)
capital lease obligations of such Person; and (f) Indebtedness of others
guaranteed by such Person.
"INVESTORS" shall have the meaning assigned to such term in the
preamble of this Agreement.
"ISSUER" shall have the meaning assigned to such term in the preamble
of this Agreement.
"ISSUE DATE" shall mean the date hereof which date shall be the date of
the original issuance of the Warrants hereunder.
"LIEN" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, a Person shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"MAJORITY WARRANT STOCKHOLDERS" shall mean the Holders of a majority of
the Warrant Stock issued or issuable upon exercise of the Warrants.
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"MANAGEMENT FEES" shall mean for any period, all fees, emoluments or
similar compensation paid or incurred by any Person (other than any such fees,
emoluments or similar compensation paid to or incurred and payable to the Issuer
or any of the Subsidiaries) in respect of services rendered in connection with
the management or supervision of the management of such Person, other than
salaries, bonuses and other compensation paid to any full-time executive
employee in respect of such full-time employment.
"NOTE AGREEMENT" shall have the meaning assigned to such term in the
first recital of this Agreement.
"NOTES" shall have the meaning assigned to such term in the first
recital of this Agreement.
"OPTION" shall mean any warrant, option or other right to subscribe for
or purchase a specified security of the Issuer.
"PERSON" shall mean a corporation, an association, a limited liability
company, a partnership, a joint venture, an organization, a business, an
individual or a Governmental Authority.
"QUALIFIED PUBLIC OFFERING" shall mean a primary public offering of
Common Stock under the Securities Act resulting in aggregate net cash proceeds
to the Company of not less than Ten Million ($10,000,000) Dollars.
"REGISTRATION AGREEMENT" shall mean the Registration Agreement, dated
as of the date hereof, between the Issuer and the Investors relating to the
registration of the Registrable Securities (as defined therein) under and
pursuant to the Securities Act, as the same shall be modified and supplemented
and in effect from time to time.
"RESTRICTED SECURITIES" shall mean Restricted Stock and Restricted
Warrants.
"RESTRICTED STOCK" shall mean Warrant Stock evidenced by a certificate
bearing or required to bear the restrictive legend set forth in Section 3.03
hereof.
"RESTRICTED WARRANTS" shall mean Warrants evidenced by a certificate
bearing or required to bear the restrictive legend set forth in Section 3.03
hereof.
"RULE 144" shall mean Rule 144 promulgated by the Commission under the
Securities Act (or any successor or similar rule then in force).
"RULE 144A" shall mean Rule 144A promulgated by the Commission under
the Securities Act (or any successor or similar rule then in force).
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"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLER NOTE" shall mean the Issuer's 10% Convertible Subordinated
Promissory Note in the amount of $8,000,000 payable to Wind Point Partners III.
"STOCKHOLDER" shall mean any Person who directly or indirectly owns any
shares of Common Stock (including Warrant Stock).
"STOCK UNIT" shall have the meaning assigned to such term in the
Warrants.
"SUBSIDIARY" shall mean any Person in which the Issuer, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than 50% of
either the equity interests in or the Voting Capital Stock of such Person.
"THIRD PARTY" shall mean a Person or entity not otherwise an Affiliate
of the Issuer.
"TRANSFER" shall mean any sale, transfer, assignment, pledge or other
disposal, whether direct or indirect, by any Holder of all or any portion of its
beneficial interest in its Warrant or the related Warrant Stock.
"VOTING CAPITAL STOCK" with respect to any corporation shall mean its
capital stock entitled to vote generally for the election of directors. In the
case of a corporation with more than one class of capital stock entitled to vote
generally for the election of directors, references to "a majority of the Voting
Capital Stock" or to a specific percentage of Voting Capital Stock shall be
deemed to be references to a number of shares of Voting Capital Stock entitling
the holders thereof, in the aggregate, to vote the requisite percentage of total
votes available to all classes of Voting Capital Stock.
"WARRANT STOCK" shall mean (a) the shares of Common Stock purchased or
purchasable by the Holders of the Warrants upon the exercise thereof, and (b)
any additional shares of Common Stock issued or distributed by way of a
dividend, stock split or other distribution in respect of the Common Stock
referred to in clause (a) above, or acquired by way of any rights offering or
similar offering made in respect of the Common Stock referred to in said
clause (a). Any Warrant Stock purchased by the Issuer shall, upon such
purchase, cease to be Warrant Stock, cease to be outstanding and the Issuer,
upon such purchase, shall not be deemed a Holder.
"WARRANTS" shall mean each warrant certificate covering the purchase of
shares of Common Stock in the form of ANNEX I hereto, and all warrant
certificates covering such stock issued upon transfer, division or combination
of, or in substitution for, any thereof.
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1.02 ACCOUNTING TERMS AND DETERMINATION. Except as otherwise may be
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Holders hereunder and under
the Warrants shall be prepared, in accordance with GAAP. All calculations made
for the purposes of determining compliance with the terms of this Agreement and
the Warrants shall (except as otherwise may be expressly provided herein) be
made by application of GAAP.
1.03 REFERENCE TO NOTE AGREEMENT. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Note
Agreement.
SECTION 2. PURCHASE AND SALE OF WARRANTS.
2.01 AUTHORIZATION AND ISSUANCE OF SHARES AND WARRANTS. The Issuer has
authorized the issuance of (a) the Warrants to the Investors pursuant to this
Agreement, and (b) such number of shares of Common Stock as shall be necessary
to permit the Issuer to comply with its obligations to issue Common Stock
pursuant to the Warrants.
2.02 ISSUANCE OF WARRANTS. On the date hereof, the Issuer shall (a)
issue to the Investors Warrants representing, in the aggregate, 2,986,467 shares
of the Common Stock (such number subject to adjustment after the Issue Date in
accordance with Sections 4 and 5 of the Warrants) allocated among the Investors
in accordance with Annex 1 to the Note Agreement, (b) deliver to each Investor a
certificate for the Warrant to be acquired by such Investor pursuant to this
Section 2.02, registered in the name of such Investor, except that, if such
Investor shall notify the Issuer in writing prior to such issuance that it
desires certificates for warrants to be issued in other denominations or
registered in the name or names of any Affiliate, nominee or nominees of such
Investor for its or their benefit, then the certificate for the Warrant shall be
issued to such Investor in the denominations and registered in the name or names
specified in such notice, and (c) deliver to the Investors a legal opinion from
counsel to the Issuer in form and substance satisfactory to the Investors.
2.03 RESERVED.
2.04 PURCHASE FOR THE INVESTORS' ACCOUNT. Each Investor jointly and not
severally represents and warrants to the Issuer as follows:
(a) Such Investor is purchasing and shall purchase its Warrant for its
own account, without a view to the distribution thereof, all without prejudice,
however, to the right of such Investor at any time, in accordance with this
Agreement or the Registration Agreement, lawfully to sell or otherwise to
dispose of all or any part of the Warrant or the Warrant Stock held by it.
(b) Such Investor is an "accredited investor" within the meaning of
Regulation D under the Securities Act.
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2.05 SECURITIES ACT COMPLIANCE. Each Investor understands that the
Issuer has not registered the Warrants or the Warrant Stock under the Securities
Act, and the Investors agree that neither the Warrants nor the Warrant Stock
shall be sold or transferred or offered for sale or transfer without
registration under the Securities Act or the availability of an exemption
therefrom, all as more fully provided in Section 3 hereof and in the
Registration Agreement.
SECTION 3. RESTRICTIONS ON TRANSFERABILITY.
3.01 TRANSFERS GENERALLY. The Restricted Securities shall be
transferable only upon the conditions specified in this Section 3 and in the
Registration Agreement.
3.02 TRANSFERS OF RESTRICTED SECURITIES PURSUANT TO REGISTRATION
STATEMENT RULE 144 AND RULE
144A.
The Restricted Securities may be offered or sold by the Holder thereof
pursuant to:
(i) an effective registration statement under the Securities Act;
(ii) Rule 144 or Rule 144A, to the extent applicable; or
(iii) any other legally available means of transfer; PROVIDED, such
Holder shall deliver, at such Holder's expense, to the Issuer a notice with
respect to the proposed transfer, together with an opinion of counsel reasonably
satisfactory to the Issuer (which may be a licensed attorney employed by an
Investor), to the effect that an exemption from registration under the
Securities Act is available.
(c) In the event of any proposed permitted transfer of Warrants or
Warrant Stock hereunder, the Issuer shall assist such Holder in disposing of its
Warrants and Warrant Stock in a prompt and orderly manner and, at the request of
such Holder, the Issuer shall provide (and authorize such Holder to provide)
financial and other information concerning the Issuer to any prospective
purchaser of the Warrants or Warrant Stock owned by such Holder as such
purchaser may reasonably request; PROVIDED THAT, upon request of the Issuer,
such purchaser shall enter into a confidentiality agreement with respect to any
such non-public information in the form of Section 5.6 of the Note Agreement.
3.03 RESTRICTIVE LEGENDS. Unless and until otherwise permitted by this
Section 3, each certificate for Warrants issued under this Agreement, each
certificate for any Warrants issued to any subsequent transferee of any such
certificate, each certificate for any Warrant Stock issued upon exercise of any
Warrant and each certificate for any Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
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"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT DATED AS OF
DECEMBER 30, 1998 (AS AMENDED, MODIFIED AND SUPPLEMENTED, THE "WARRANT
AGREEMENT") AMONG POLYVISION CORPORATION, A NEW YORK CORPORATION ("ISSUER"),
AND XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY, XXXX XXXXXXX VARIABLE LIFE
INSURANCE COMPANY AND XXXXXXX MEZZANINE PARTNERS L.P. ("INVESTORS") AND THE
REGISTRATION AGREEMENT DATED AS OF DECEMBER 30, 1998 (AS AMENDED, MODIFIED
AND SUPPLEMENTED, THE "REGISTRATION AGREEMENT") AMONG THE ISSUER AND THE
INVESTORS, AS EACH OF THE WARRANT AGREEMENT AND THE REGISTRATION AGREEMENT
MAY BE AMENDED, MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME,
AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE
VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE
FORM OF EACH OF THE WARRANT AGREEMENT AND THE REGISTRATION AGREEMENT IS ON
FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER.
THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO
BE BOUND BY THE PROVISIONS OF THE WARRANT AGREEMENT AND THE REGISTRATION
AGREEMENT."
3.04 TERMINATION OF RIGHTS AND RESTRICTIONS. All the restrictions
imposed by this Section 3 upon the transferability of the Restricted Securities
and all rights under this Agreement with respect to Restricted Securities shall
cease and terminate as to any particular Restricted Security when such
Restricted Security shall have been effectively registered under the Securities
Act and applicable state securities laws and sold by the Holder thereof in
accordance with such registration or sold under and pursuant to Rule 144 or is
eligible to be sold under and pursuant to paragraph (k) of Rule 144. Whenever
the restrictions imposed by this Section 3 shall terminate as to any Restricted
Security as hereinabove provided, the Holder thereof shall be entitled to
receive from the Issuer, without expense, a new certificate evidencing such
Restricted Security not bearing the restrictive legend otherwise required to be
borne by a certificate evidencing such Restricted Security.
3.05 CANCELLATION AND ISSUANCE. Upon any transfer of any Warrant in
compliance with the terms hereof, the transferring Holder may request (upon 10
days' prior notice to the Issuer) that (a) a number of Warrants held by such
Holder be canceled on the date of such assignment and transfer and (b) a like
number of Warrants be issued by the Issuer to the Person to whom such Warrant is
being assigned or otherwise transferred, and upon the date specified in such
request:
(i) the Issuer will deliver to each Person that receives a certificate
for Warrants a favorable legal opinion from counsel to the Issuer acceptable to
such Person, covering the matters set forth in the opinion of counsel delivered
to the Issuer pursuant to Section 3.02 hereof in form and substance satisfactory
to such Person;
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(ii) each Person that receives a certificate for Warrants will execute
and deliver to the Issuer (x) a certificate to the Issuer affirming the
representations and warranties contained in Section 2.03 hereof as of such date,
and (y) a counterpart of this Agreement; and
(iii) the Issuer will deliver a certificate to each Person that
receives a certificate for Warrants affirming the representations and warranties
contained in the Note Agreement as of such date, subject to any updates and
disclosures made by the Issuer at such time.
SECTION 4. RESERVED
SECTION 5. RESERVED
SECTION 6. HOLDERS' RIGHTS.
6.01 DELIVERY EXPENSES. If a Holder surrenders any certificate for
Warrants or Warrant Stock to the Issuer (or a transfer agent of the Issuer) in
exchange for certificates of other denominations or registration in another name
or names, the Issuer shall (provided such Holder is in compliance with the terms
of this Agreement) cause such new certificates to be issued to such Holder and
any transferees, as may be appropriate, and shall pay all delivery costs
(including the cost of insurance) associated therewith (including any costs
incurred by the Holder).
6.02 TAXES. Subject to Section 9 of the Warrants, the Issuer shall pay
all taxes (other than Federal, state or local income taxes) which may be payable
in connection with the execution and delivery of this Agreement or the
Registration Agreement or the issuance of any Warrant and Warrant Stock
hereunder or in connection with any modification of this Agreement, the
Registration Agreement or the Warrants and shall hold each Holder harmless
without limitation as to time against any and all liabilities with respect to
all such taxes. The obligations of the Issuer under this Section 6.02 shall
survive any redemption, repurchase or acquisition of Warrants or Warrant Stock
by the Issuer, any termination of this Agreement or the Registration Agreement,
and any cancellation or termination of the Warrants.
6.03 REPLACEMENT OF INSTRUMENTS. Upon receipt by the Issuer of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants or Warrant Stock, and
(a) in the case of loss, theft or destruction, an indemnity reasonably
satisfactory to it, PROVIDED that, if the owner of the same is an Investor or an
Institutional Investor, its own agreement of indemnity shall be deemed to be
satisfactory, or
(b) in the case of mutilation, upon surrender or cancellation thereof,
the Issuer, at its expense, shall execute, register and deliver a new
certificate or instrument for (or covering the purchase of) an equal number of
Warrants or Warrant Stock.
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6.04 INDEMNIFICATION. The Issuer shall indemnify and hold harmless each
of the Investors and the Holders and each of their respective directors,
officers, employees, stockholders, Affiliates and agents (each, an "INDEMNIFIED
PERSON") from and against any and all losses, claims, damages, liabilities (or
actions or other proceedings commenced or threatened in respect thereof) and
expenses that arise out of, result from, or in any way relate to, this
Agreement, the Warrants, the Warrant Stock, or the Registration Agreement, or in
connection with the other transactions contemplated hereby and thereby,
including any legal or other expenses incurred in connection with investigating,
defending or participating in the defense of any such loss, claim, damage,
liability, action or other proceeding (whether or not such Indemnified Person is
a party to any action or proceeding out of which any such expenses arise),
except to the extent incurred by reason of the gross negligence or willful
misconduct of such Indemnified Person or such Indemnified Person's willful and
material breach of this Agreement, the Warrants or the Registration Agreement.
No Indemnified Person shall be responsible or liable to Issuer for any damages
which may be alleged as a result of or relating to this Agreement, the Warrants
or the Registration Agreement, or in connection with the other transactions
contemplated hereby and thereby, other than to the extent incurred by reason of
the gross negligence or willful misconduct of such Indemnified Person or such
Indemnified Person's willful and material breach of this Agreement, the Warrants
or the Registration Agreement. The provisions of this Section 6.04 shall survive
the issuance of the Warrant Stock, the termination of this Agreement, and the
Expiration Date.
6.05 BOARD OBSERVER. The Issuer shall give the Holders all written
materials and other information related thereto (including copies of all minutes
and all resolutions adopted by the Board and by the board of directors of each
Subsidiary) promptly upon the approval or adoption thereof, at the same time and
in the same manner as such written materials and other information are given to
members of the Board and of the board of directors of each Subsidiary of the
Issuer.
SECTION 7. OTHER COVENANTS OF ISSUER. The Issuer agrees with each
Holder that, so long as any of the Warrants and/or Warrant Stock shall be
outstanding:
7.01 FINANCIAL STATEMENTS, ETC. The Issuer shall deliver the
information specified below to each Holder or holder of Warrant Stock:
(a) as soon as practicable after the end of each quarterly fiscal
period in each fiscal year of the Issuer (other than the last quarterly fiscal
period of each such fiscal year), and in any event within forty-five (45) days
thereafter:
(i) a consolidated balance sheet as at the end of such quarter; and
(ii) consolidated statements of income and cash flows for such quarter
and (in the case of the second and third quarters) for the portion of the fiscal
year ending with such quarter;
for the Issuer and its Subsidiaries, setting forth in each case, in comparative
form, the financial statements for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared
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in accordance with GAAP applicable to quarterly financial statements generally,
and certified as complete and correct by a senior financial officer and
accompanied by an officer's certificate in accordance with Section 5.3 of the
Note Agreement; PROVIDED, that timely delivery of copies of the Issuer's
Quarterly Report on Form 10-Q filed with the Commission shall be deemed to
satisfy the requirements of this Section 7.01(a) so long as such Quarterly
Report contains or is accompanied by the information specified in this Section
7.01(a);
(b) as soon as practicable after the end of each fiscal year of the
Issuer, and in any event within ninety (90) days thereafter:
(i) a consolidated balance sheet as at the end of such year; and
(ii) consolidated statements of income, stockholders' equity and cash
flows for such year;
for the Issuer and its Subsidiaries, setting forth, in comparative form, the
financial statements for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by an (1) an audit report
thereon of independent certified public accountants of recognized national
standing, which report shall state without qualification (including, without
limitation, qualifications related to the scope of the audit, the compliance of
the audit with generally accepted auditing standards, or the ability of the
Issuer or a material Subsidiary thereof to continue as a going concern), that
such financial statements have been prepared and are in conformity with GAAP;
and (2) an officer's certificate in accordance with Section 5.3 of the Note
Agreement;
(c) promptly upon their becoming available, and in any event within
fifteen (15) days thereafter:
(i) each financial statement, report, notice or proxy statement sent by
the Issuer to stockholders generally;
(ii) each regular or periodic report (including, without limitation,
each Form 10-K, Form 10-Q and Form 8-K), any registration statement which shall
have become effective, and each final prospectus and all amendments thereto
filed by the Issuer or any of its Subsidiaries with the Commission; and
(d) from time to time such other information regarding the financial
condition, operations, business or prospects of the Issuer or any of its
Subsidiaries as any Holder may reasonably request.
7.02 ACCOUNTANTS; SHAREHOLDER MEETINGS. The Issuer shall, (a) retain a
nationally recognized independent accounting firm as its auditors, and (b)
afford each Holder and its authorized agents the right to attend all meetings of
stockholders of the Issuer and/or its Subsidiaries.
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7.03 ARMS LENGTH TRANSACTIONS. The Issuer will not engage in any
transaction with a stockholder or any Affiliate of a stockholder which is not on
an arms length basis or which is on terms which are more favorable to such
stockholder or Affiliate than could be obtained by the Issuer from an
unaffiliated third party, including, without limitation, the purchase of Issuer
securities, or receipt of fees or other compensation from the Issuer.
7.04 RESTRICTIONS ON PERFORMANCE. The Issuer shall not enter into an
agreement or other instrument limiting in any manner its ability to perform its
obligations under this Agreement, the Registration Agreement or the Warrants, or
making such performance or the issuance of shares of Common Stock upon the
exercise of any Warrant a default under any such agreement or instrument other
than the Note Agreement and the Senior Credit Facility.
7.05 MODIFICATION OF ARTICLES OF INCORPORATION. Without the prior
written consent of the Majority Warrant Stockholders, the Issuer shall not amend
its Articles of Incorporation in any respect relating to the Common Stock other
than (a) to increase or decrease the number of shares of authorized capital
stock (subject to the first sentence of Section 7 of the Warrants), (b) to
decrease the par value of any shares of Common Stock, or (c) in connection with
a Qualified Public Offering.
7.06 MANAGEMENT FEES. Except as and to the extent permitted by the Note
Agreement, the Issuer shall not pay, or be or become obligated to pay, any
Management Fees to any Person, or any interest on any deferred obligation
therefor, including, without limitation, to any shareholder, director, officer
or employee of the Issuer.
SECTION 8 MISCELLANEOUS.
8.01 HOME OFFICE PAYMENT. The Issuer shall punctually pay all amounts
which become due and payable to the Investors with respect to any Warrant or
Warrant Stock to the Investors at the address registered on the books of the
Issuer maintained for such purpose, or at such other place and in such manner as
the Investors may designate by notice to the Issuer, without presentation or
surrender of such Warrant or the making of any notation thereon. The Investors
agree that prior to the sale, transfer or other disposition of a part of any
Warrant, it will make notation thereon of the number of Stock Units covered by
the part of the Warrant sold, transferred or disposed, or surrender the same in
exchange for a Warrant covering the number of Stock Units remaining on the
Warrant so surrendered. The Issuer agrees that the provisions of this Section
8.01 shall inure to the benefit of any other Holder registered on the books of
the Issuer.
8.02 WAIVER. No failure on the part of the Investors to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement, the Warrants or the Registration Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement, the Warrants or the
Registration Agreement preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
12
8.03 NOTICES.
(a) All notices, requests and other communications provided for herein
and the Warrants (including any waivers or consents under this Agreement and in
the Warrants) shall be given or made in writing,
(i) if to the Issuer:
PolyVision Corporation
00-00 00xx Xxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: President
Telephone: (000) 000-0000
Fax: 000-000-0000
WITH A COPY TO:
Xxxxxxxxx Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
(ii) if to an Investor:
Xxxx Xxxxxxx Mutual Life Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Bond and Corporate Finance Department T-57
Fax: (000) 000-0000
(iii) if to any Holder or holder of Warrant Stock, to the address for
such Holder or holder as it appears in the stock or warrant ledger of the
Issuer;
or, to any such Person at such other address as such Person may designate in a
written notice to the Issuer, the Investors and the other Holders.
(b) All such notices, requests and other communications shall be (i)
personally delivered, sent by courier guaranteeing overnight delivery or sent by
registered or certified mail,
13
return receipt requested, postage prepaid, in each case given or addressed as
aforesaid and (ii) effective upon receipt.
(c) For purposes of giving notices, waivers and consents hereunder,
Holders shall be deemed holders of the Warrant Stock issued on exercise of
Warrants.
8.04 EXPENSES. ETC. The Issuer agrees to pay or reimburse the Investors
and the Holders for: (a) all reasonable out-of-pocket costs and expenses of the
Investors and the Holders (including all document production and duplication
charges and the reasonable fees and expenses of counsel to the Investors), in
connection with (i) the negotiation, preparation, execution and delivery of this
Agreement, the Warrants and the Registration Agreement and the issuance of
Warrants hereunder, and (ii) any proposed amendment, modification or waiver of
(or consents in respect of) any of the terms of this Agreement, the Registration
Agreement or the Warrants (whether or not any such amendment, modification,
waiver or consent is effected); and (b) all reasonable costs and expenses of the
Investors and the Holders (including reasonable legal fees and expenses)
incurred in connection with (i) any default by the Issuer hereunder or under the
Warrant or the Registration Agreement or any enforcement proceedings resulting
therefrom, (ii) the enforcement of this Section 8.04 or any other rights of the
Holders hereunder or under the Warrants (including the costs of determining
whether or how to enforce such rights), (iii) responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the transactions contemplated hereby or by reason of any
Person's having acquired any Warrant, and (iv) the cost and expenses incurred in
any bankruptcy case involving the Issuer or any Subsidiary. The provisions of
this Section 8.04 shall survive the issuance of the Warrant Stock, the
termination of this Agreement, and the Expiration Date.
8.05 AMENDMENTS. ETC. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement may be amended or modified only by an
instrument in writing signed by the Issuer and the holders of (a) two-thirds in
number of shares of the Restricted Stock and (b) Restricted Warrants covering
two-thirds in number of the Restricted Stock issuable upon conversion of all
Restricted Warrants; PROVIDED, HOWEVER, that no such amendment or waiver shall,
without the written consent of all holders of such shares and Warrants at the
time outstanding, amend this Section 8.05.
8.06 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
8.07 SURVIVAL. All representations and warranties made by the Issuer
herein or in any certificate or other instrument delivered by it or on its
behalf under this Agreement or the Registration Agreement (and all statements in
any such certificate or other instrument so delivered shall constitute
representations and warranties by the Issuer hereunder) shall be considered to
have been relied upon by the Investors and shall survive the issuance of the
Warrants or the Warrant Stock regardless of any investigation made by or on
behalf of the Investors.
14
8.08 SPECIFIC PERFORMANCE. Damages in the event of breach of this
Agreement by a Holder or the Issuer would be difficult, if not impossible, to
ascertain, and it is therefore agreed that each Holder and the Issuer, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof, and each Holder and the Issuer hereby waives
any and all defenses it may have on the ground of lack of jurisdiction or
competence of the court to grant such an injunction or other equitable relief.
The existence of this right will not preclude the Holders or the Issuer from
pursuing any other rights and remedies at law or in equity which the Holders or
the Issuer may have.
8.09 CAPTIONS. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart signature page or counterpart.
8.11 GOVERNING LAW, WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION, ETC.
THIS WARRANT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.
THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE WARRANTS, THE REGISTRATION
AGREEMENT OR ANY OF THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS CONTEMPLATED
HEREBY.
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE WARRANTS, THE REGISTRATION AGREEMENT, OR ANY OF THE DOCUMENTS,
AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY ACTION OR
PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH
UNDER THIS AGREEMENT, THE WARRANTS, THE REGISTRATION AGREEMENT OR ANY DOCUMENT
OR AGREEMENT CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT BY SUCH PARTY IN ANY
FEDERAL DISTRICT COURT LOCATED IN NEW YORK COUNTY, NEW YORK, OR ANY NEW YORK
STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK AS SUCH PARTY MAY IN ITS SOLE
DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE IN
PERSONAM JURISDICTION OF EACH SUCH COURT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY
TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT
15
SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION, EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY BROUGHT IN ANY SUCH
COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH PARTY HERETO IRREVOCABLY AGREES THAT PROCESS PERSONALLY SERVED OR
SERVED BY U.S. REGISTERED MAIL AT THE ADDRESSES PROVIDED HEREIN FOR NOTICES
SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
WARRANTS, THE REGISTRATION AGREEMENT OR ANY DOCUMENT, AGREEMENT OR TRANSACTION
CONTEMPLATED HEREBY, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE
ANY JUDGEMENT IN RESPECT OF ANY BREACH HEREUNDER OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED
AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE
OR ANY COMMERCIAL DELIVERY SERVICE.
NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF THE
PARTIES TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY
APPLICABLE LAW OR TO OBTAIN JURISDICTION IN SUCH OTHER JURISDICTION, AND IN SUCH
OTHER MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW.
8.12 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
8.13 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof.
16
8.14 CONFIDENTIALITY. Each Holder agrees (on behalf of itself and each
of its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with safe and sound practices, any non-public information supplied to
it by the Issuer pursuant to this Agreement which is identified by the Issuer as
being confidential at the time the same is delivered to such Holder, PROVIDED
that nothing herein shall limit the disclosure of any such information (a) to
the extent required by statute, rule, regulation or judicial process, (b) to
counsel or other agents or advisors for any of the Holders, (c) to regulatory
personnel, auditors or accountants, (d) in connection with any litigation to
which any one or more of the Holders is a party, (e) to a Subsidiary or
Affiliate of such Holder or (f) to any prospective holder of Warrants or Warrant
Stock so long as such prospective holder first executes and delivers to such
Holder and the Issuer a confidentiality agreement substantially in the form of
ANNEX I to the Registration Agreement.
17
IN WITNESS WHEREOF, the parties hereto have duly executed this Warrant
Agreement as of the date first above written.
POLYVISION CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------
Title: Chief Executive Officer
------------------------------
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
-------------------------------
Title: Assistant Investment Officer
------------------------------
XXXXXXX MEZZANINE PARTNERS L.P.
By: Xxxxxxx Mezzanine Investments LLC, its
General Partner
By: Xxxx Xxxxxxx Mutual Life Insurance Company,
as Investment Manager
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
---------------------------------
Title: Assistant Investment Officer
--------------------------------
XXXX XXXXXXX VARIABLE LIFE
INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------------
Title: Vice President, Investments
---------------------------------
