Exhibit 99.1
EXCHANGE AGREEMENT
AGREEMENT, dated as of November16, 1998, among PolyVision Corporation, a
New York corporation ("POLYVISION"), The Alpine Group, Inc., a Delaware
corporation ("ALPINE"), and, if executed by such party in accordance with
Section 5.02, Kirkbi Projekt A/S ("KIRKBI," and each of Alpine and Kirkbi are
sometimes referred to herein as a "TRANSFEROR" and together as the
"TRANSFERORS").
R E C I T A L S
The Boards of Directors of each of the parties hereto, deeming it advisable
for the benefit of each of the parties hereto and their respective stockholders
that the Transferors exchange certain shares of preferred stock and certain
indebtedness of PolyVision for shares of common stock of PolyVision and other
preferred stock of PolyVision.
THEREFORE, for and in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
THE EXCHANGE
1.01 TRANSFER AND EXCHANGE. Subject to and in accordance with the terms
and conditions of this Agreement, on the date hereof
(a) each of the Transferors shall transfer and deliver to PolyVision
the number shares of the Series A Preferred Stock, par value $.01 per
share, of PolyVision, together with accrued and unpaid dividends (the
"SERIES A PREFERRED STOCK") as set forth on Exhibit A hereto, and
PolyVision shall issue, transfer and deliver to the Transferors the number
of duly authorized, validly issued, fully paid and nonassessable shares of
Series B Convertible Preferred Stock, par value $.01 per share, of
PolyVision, having the terms and conditions set forth on Exhibit B hereto
(the "SERIES B PREFERRED STOCK"), and common stock, par value $.001 per
share, of PolyVision ("POLYVISION COMMON STOCK"), each as set forth on
Exhibit A hereto, and
(b) Alpine shall transfer and deliver to PolyVision the principal
amount of indebtedness of PolyVision as set forth on Exhibit A hereto (the
"POLYVISION DEBT"), and PolyVision shall issue, transfer and deliver to
Alpine the number of duly authorized, validly issued, fully paid and
nonassessable shares of PolyVision Common Stock as set forth on Exhibit A
hereto.
1.02 THE CLOSING. The closing of the transfer and exchange described in
Section 1.01 (the "CLOSING") shall take place at the offices of Alpine on the
date hereof and, if
executed after such date by Kirkbi in accordance with Section 5.02, then as to
Kirkbi on the date of execution by Kirkbi.
1.03 DELIVERIES BY TRANSFERORS
At the Closing, the Transferors, as applicable, shall deliver to
PolyVision:
(a) certificates representing the Series A Preferred Stock to be
exchanged, duly endorsed in blank, in proper form for transfer; and
(b) evidence of the surrender and cancellation of the PolyVision Debt in
form and substance reasonably satisfactory to counsel to each of the parties.
1.04 DELIVERIES BY POLYVISION. PolyVision shall deliver to the
Transferors, as applicable, against delivery of the Series A Preferred Stock and
PolyVision Debt to be exchanged hereunder, and in payment of all accrued and
unpaid dividends on such Series A Preferred Stock,
(a) certificates registered in the name of each Transferors representing
the appropriate number of shares PolyVision Common Stock as set forth on Exhibit
A, and
(b) certificates registered in the name of each Transferors representing
the appropriate number of shares Series B Preferred Stock as set forth on
Exhibit A.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE TRANSFERORS
Each Transferor represents and warrants to, and agrees with, PolyVision as
follows:
2.01 VALIDITY OF TRANSACTION. Such Transferor has all requisite power and
authority to execute, deliver, and perform this Agreement and to transfer and
deliver to PolyVision the shares of Series A Preferred Stock and the PolyVision
Debt, as applicable. All necessary corporate proceedings of such Transferor
have been duly taken to authorize the execution, delivery, and performance of
this Agreement. This Agreement has been duly authorized, executed, and
delivered by such Transferor, is the legal, valid, and binding obligation of
such Transferor, and is enforceable as to such Transferor in accordance with
its terms. No consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any Federal, state, local, or
other governmental authority or of any court or other tribunal is required by
such Transferor for the execution, delivery, or performance of this Agreement by
such Transferor. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which such
Transferor is a party, or by which any of its
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properties or assets is bound, is required for the execution, delivery, or
performance by such Transferor of this Agreement, except for such consents as
have been obtained at or prior to the date of this Agreement; and the execution,
delivery, and performance of this Agreement by such Transferor will not violate,
result in a breach of, conflict with, or (with or without the giving of notice
or the passage of time or both) entitle any party to terminate or call a default
under any such contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the Certificate
of Incorporation or by-laws of such Transferor, or violate, result in a breach
of, or conflict with any law, rule, regulation, order, judgment, or decree
binding on such Transferor or to which any of its operations, business,
properties, or assets is subject. Such Transferor has good and marketable title
to the shares of Series A Preferred Stock and the PolyVision Debt being
transferred by it hereunder, as applicable.
2.02 FINDER OR BROKER. Neither such Transferor nor any person acting on
behalf of such Transferor has negotiated with any finder, broker, intermediary,
or similar person in connection with the transactions contemplated hereby.
2.03 ACCREDITED INVESTOR. Such Transferor is an "accredited investor," as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933 (the "SECURITIES ACT").
2.04 INVESTMENT INTENT. Such Transferor is acquiring the shares of
PolyVision Common Stock and Series B Preferred Stock pursuant hereto for its own
account for investment and not with a view to, or for sale in connection with,
any public distribution thereof in violation of the Securities Act. Such
Transferor understands that such shares of PolyVision Common Stock and Series B
Preferred Stock are "restricted securities" and have not been registered for
sale under the Securities Act or qualified under applicable state securities
laws and that the PolyVision Common Stock and Series B Preferred Stock will be
delivered to such Transferor pursuant to one or more exemptions from the
registration or qualification requirements of such securities laws and that the
representations and warranties contained in this Article II are given with the
intention that PolyVision may rely thereon for purposes of claiming such
exemptions. Such Transferor understands that it must bear the economic risk of
its investment in PolyVision for an indefinite period of time, as the PolyVision
Common Stock and Series B Preferred Stock cannot be sold unless registered under
the Securities Act and qualified under state securities laws, unless an
exemption from such registration and qualification is available.
2.05 TRANSFER OF SHARES. Such Transferor will not sell or otherwise
dispose of any PolyVision Common Stock or Series B Preferred Stock unless (a) a
registration statement with respect thereto has become effective under the
Securities Act and such shares have been qualified under applicable state
securities laws or (b) there is presented to PolyVision notice of the proposed
transfer and, if PolyVision so requests, there is also presented to PolyVision a
legal opinion reasonably satisfactory to PolyVision that such registration and
qualification are not required. Such Transferor consents that the transfer
agent for the PolyVision Common Stock and Series B Preferred Stock may be
instructed not to transfer the PolyVision Common Stock or Series B Preferred
Stock acquired pursuant hereto unless it receives satisfactory evidence of
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compliance with the foregoing provisions, and that there may be endorsed upon
any certificate representing the PolyVision Common Stock or Series B Preferred
Stock acquired pursuant hereto (and any certificates issued in substitution
therefor) the following legend calling attention to the foregoing restrictions
on transferability and stating in substance:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR QUALIFIED UNDER ANY STATE SECURITIES LAW. THESE SECURITIES
MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS THEY
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES OR BLUE SKY LAWS OR AN EXEMPTION IS AVAILABLE."
PolyVision shall, upon the request of any holder of a certificate bearing the
foregoing legend and the surrender of such certificate, issue a new certificate
without such legend if (i) the security evidenced by such certificate has been
effectively registered under the Securities Act and qualified under any
applicable state securities law and sold by the holder thereof in accordance
with such registration and qualification or (ii) such holder shall have
delivered to such Transferor a legal opinion reasonably satisfactory to such
Transferor to the effect that the restrictions set forth herein are no longer
required or necessary under the Securities Act or any applicable state law.
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF POLYVISION
PolyVision represents and warrants to, and agrees with, the Transferors as
follows:
3.01 VALIDITY OF TRANSACTION. PolyVision has all requisite power and
authority to execute, deliver, and perform this Agreement and to issue and sell
to the Transferors the shares of PolyVision Common Stock and Series B Preferred
Stock. All necessary corporate proceedings of PolyVision have been duly taken
to authorize the execution, delivery, and performance of this Agreement, and the
issuance and sale to the Transferors of the shares of PolyVision Common Stock
and Series B Preferred Stock. This Agreement has been duly authorized,
executed, and delivered by PolyVision, is the legal, valid, and binding
obligation of PolyVision, and is enforceable as to PolyVision in accordance with
its terms. No consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any Federal, state, local, or
other governmental authority or of any court or other tribunal or stock exchange
is required by PolyVision for the execution, delivery, or performance of this
Agreement by PolyVision. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which PolyVision is
a party, or by which any of
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its properties or assets is bound, is required for the execution, delivery, or
performance by PolyVision of this Agreement, except for such consents as have
been obtained at or prior to the date of this Agreement; and the execution,
delivery, and performance of this Agreement by PolyVision will not violate,
result in a breach of, conflict with, or (with or without the giving of notice
or the passage of time or both) entitle any party to terminate or call a default
under any such contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the Certificate
of Incorporation or by-laws of PolyVision, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree binding on
PolyVision or to which any of its operations, business, properties, or assets is
subject. The shares of PolyVision Common Stock and Series B Preferred Stock
have been duly authorized and, upon receipt by PolyVision from the Transferors
of the Series A Preferred Stock and the PolyVision Debt being transferred
pursuant to this Agreement, will be validly issued, fully paid, and
nonassessable, will not have been issued in violation of any preemptive right of
stockholders or rights of first refusal, and the Transferors will receive good
title to the shares of PolyVision Common Stock and Series B Preferred Stock,
free and clear of all liens, security interests, pledges, charges, encumbrances,
stockholders agreements, and voting trusts (other than any created by such
Transferor).
3.02 FINDER OR BROKER. Neither PolyVision nor any person acting on behalf
of PolyVision has negotiated with any finder, broker, intermediary, or similar
person in connection with the transactions contemplated herein.
3.03 ACCREDITED INVESTOR. PolyVision is an "accredited investor," as that
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act.
3.04 FULL DISCLOSURE. All documents filed by PolyVision pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") since December
31, 1993 (i) were prepared in accordance with the requirements of the Exchange
Act and the rules and regulations thereunder, (ii) did not at the time they were
filed contain any untrue statement of a material fact, and (iii) did not at the
time they were filed omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. From the date as of which information is given in the most
recent report filed by PolyVision under the Exchange Act to the date of this
Agreement, there has not been any material adverse change in, or any adverse
development which materially affects, the business, results of operations, or
financial condition of PolyVision and its subsidiaries taken as a whole.
ARTICLE IV
COVENANTS OF POLYVISION
4.01 REGISTRATION OF THE POLYVISION COMMON STOCK. PolyVision will use its
best efforts to effect the registration under the Securities Act of the
PolyVision Common Stock issued hereunder and issuable upon conversion of the
Series B Preferred Stock as requested by Alpine from time to time, but not
sooner than 180 days after the Closing Date. In addition,
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PolyVision shall advise the Transferors by written notice at least thirty days
prior to the filing of any registration statement under the Securities Act
covering securities of PolyVision (except with respect to registration
statements on Form X-0, Xxxx X-0 or similar forms) and will, upon the request of
any Transferor, include in any such registration statement such information as
may be required to permit a public offering of the PolyVision Common Stock,
subject to any restrictions imposed by any managing underwriter in connection
with an underwritten public offering on behalf of PolyVision. In connection
therewith, PolyVision will:
(a) promptly prepare and file with the Securities and Exchange Commission
(the "SEC") a registration statement with respect to the PolyVision Common Stock
and use its best efforts to cause such registration statement to become
effective;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and current for a period
sufficient to enable the Transferors to complete the distribution of the
PolyVision Common Stock covered by such registration statement, and comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Transferors thereof
as set forth in such registration statement;
(c) furnish to the Transferors such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus), and such
other documents as the Transferors may reasonably request in order to facilitate
the disposition of the PolyVision Common Stock owned by the Transferors;
(d) use its best efforts to register or qualify the PolyVision Common
Stock under the securities or blue sky laws of such jurisdictions of the United
States as the Transferors may reasonably request and do any other related acts
which may be reasonably necessary to enable the Transferors to consummate the
disposition in such jurisdictions of the PolyVision Common Stock owned by the
Transferors; PROVIDED, HOWEVER, that PolyVision will not be required to (i)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 4.02(d); (ii) subject itself to
taxation in any jurisdiction; or (iii) consent to general service of process in
any such jurisdiction;
(e) notify the Transferors at any time when a prospectus relating to the
PolyVision Common Stock is required to be delivered under the Securities Act, of
the happening of any event as a result of which, or the fact that, the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of a Transferor, PolyVision will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of PolyVision Common Stock, such prospectus will not contain any
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
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(f) use its best efforts to cause the PolyVision Common Stock to be listed
or quoted on each securities exchange or interdealer quotation system on which
similar securities issued by PolyVision are then listed or quoted;
(g) provide a transfer agent for all such PolyVision Common Stock not
later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements on customary terms) and take all such other actions as the
Transferors may reasonably request in order to expedite or facilitate the
disposition of the PolyVision Common Stock; and
(i) make available for inspection by the Transferors or any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant, or any other agent retained by the Transferors or any
such underwriter, all financial and other records, pertinent corporate documents
and properties of PolyVision, and cause PolyVision's officers, directors, and
employees to supply all information reasonably requested by the Transferors, any
such underwriter, attorney, accountant, or agent in connection with such
registration statement.
4.02 REGISTRATION EXPENSES. All expenses ("REGISTRATION EXPENSES")
incident to PolyVision's performance of or compliance with this Article IV with
respect to any registration of the PolyVision Common Stock will be borne by
PolyVision, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, the expense of any audit, and the
expenses and fees for listing or quoting the securities to be registered on each
securities exchange or interdealer quotation system on which similar securities
issued by PolyVision are then listed or quoted. Notwithstanding the foregoing,
however, all underwriters' discounts and commissions in respect of the sale of
PolyVision Common Stock and the fees and disbursements of counsel for the
Transferors, shall be paid by the Transferors.
4.03 PRECONDITIONS TO PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. Neither
of the Transferors may participate in any underwritten registration hereunder
unless it (i) agrees to its securities on the basis provided in any customary
underwriting arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements, and other documents
required under the terms of such underwriting arrangements.
4.04 INDEMNIFICATION AND CONTRIBUTION.
(a) PolyVision shall indemnify and hold harmless the Transferors and each
of their officers, directors, employees, agents, partners, legal counsel, and
accountants, and each controlling person of each of the foregoing (within the
meaning of the Securities Act) against any losses, claims, damages, or
liabilities, joint or several (or actions in respect thereof),
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including any of the foregoing incurred in the settlement of any litigation,
commenced or threatened, to which any of them may be subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement (or alleged untrue statement) of any
material fact contained in any registration statement under which the PolyVision
Common Stock was registered under the Securities Act or in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, (ii) 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, or (iii) any other violation by PolyVision of the
Securities Act or any state securities law in connection with any such
registration, and shall reimburse each such person entitled to indemnification
under this Section 4.04(a) for any legal or other expenses reasonably incurred
by such person in connection with investigating or defending any such loss,
claim, damage, liability, or action, as and when such expenses are incurred;
PROVIDED, HOWEVER, that PolyVision shall not be liable to any such person in any
such case to the extent that any such loss, claim, damage, or liability arises
out of or is based upon any untrue statement or omission made in such
registration statement, preliminary prospectus, or amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
PolyVision by such person, specifically for use therein.
(b) Each Transferor shall indemnify PolyVision and each of PolyVision's
officers, employees, agents, directors, legal counsel, and accountants, and each
controlling person of each of the foregoing (within the meaning of the
Securities Act) against any losses, claims, damages, or liabilities (or actions
in respect thereof), including any of the foregoing incurred in the settlement
of any litigation, commenced or threatened, joint or several, to which any of
them may be subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement (or alleged
untrue statement) of any material fact contained in any registration statement
under which the PolyVision Common Stock was registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto or 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, in each case to the extent that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) was
made in such registration statement, preliminary prospectus, or amendment or
supplement thereto solely in reliance upon and in conformity with written
information furnished to PolyVision by such Transferor specifically for use
therein, and to reimburse such persons for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
claim, damage, liability, or action, as and when such expenses are incurred.
(c) If (i) an indemnified party makes a claim for indemnification pursuant
to this Section 4.04 (subject to the limitations hereof) but it is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case or (ii) an indemnified party
seeks contribution under the Securities Act, the Exchange Act, or otherwise,
then PolyVision (including for this purpose any contribution made by or on
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behalf of any director of PolyVision, any officer of PolyVision who signed the
registration statement, and any controlling person of PolyVision) as one entity
and the Transferors (including for this purpose any contribution by or on behalf
of a person who would be indemnified by PolyVision) as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, so that PolyVision and the Transferors are
each responsible for the proportion thereof which reflects as nearly as possible
the relative fault of the Transferors and PolyVision in connection with the
facts which resulted in such losses, liabilities, claims, damages, or expenses.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Transferors or by PolyVision, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement, alleged statement, omission, or alleged
omission. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. Anything in this Section 4.04 to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 4.04 is intended to supersede any right to contribution under the
Securities Act, the Exchange Act or otherwise.
(d) Each party entitled to indemnification under this Section 4.04 (the
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has knowledge of the commencement of any action, proceeding, or investigation in
respect of which indemnity or reimbursement may be sought as provided above;
PROVIDED, HOWEVER, that the failure of such Indemnified Party to notify the
Indemnifying Party with respect to a particular action, proceeding, or
investigation shall not relieve the Indemnifying Party from any obligation or
liability (i) which it may have pursuant to this Agreement to the extent that
the Indemnifying Party is not prejudiced by the failure to notify or (ii) which
it may have otherwise than pursuant to this Agreement. The Indemnifying Party
shall promptly assume the defense of any Indemnified Party with counsel
reasonably satisfactory to such Indemnified Party, and the fees and expenses of
such counsel shall be at the sole cost and expense of the Indemnifying Party.
The Indemnified Party will cooperate with the Indemnifying Party in the defense
of any action, proceeding, or investigation for which the Indemnifying Party
assumes the defense. Notwithstanding the foregoing, any such Indemnified Party
shall have the right to employ separate counsel of its own selection in any such
action, proceeding, or investigation and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (x) the Indemnifying Party has agreed to pay such fees
and expenses, (y) the Indemnifying Party shall have failed promptly to assume
the defense of such action, proceeding, or investigation and employ counsel
reasonably satisfactory to such Indemnified Party, or (z) in the reasonable
judgment of such Indemnified Party there may be one or more defenses available
to such Indemnified Party which are not available to the Indemnifying Party in
respect of such action, proceeding, or investigation, in which case the
Indemnifying Party shall not have the right to assume the defense of such
action, proceeding, or investigation
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on behalf of such Indemnified Party. An Indemnifying Party who is not entitled
to, or elects not to, assume the defense of an action, proceeding, or
investigation shall not be obligated to pay the fees and expenses of more than
one counsel and appropriate local counsel for all parties indemnified by such
Indemnifying Party pursuant to this Section 4.04 with respect to the same
action, proceeding, or investigation, unless in the reasonable judgment of any
such Indemnified Party a conflict of interest may exist between such Indemnified
Party and any other such Indemnified Party with respect to such action, claim,
or proceeding. The Indemnifying Party shall not be liable for the settlement by
any Indemnified Party of any action, proceeding, or investigation effected
without its consent, which consent shall not be unreasonably withheld. The
Indemnifying Party shall not enter into any settlement in any action, suit, or
proceeding to which an Indemnified Party is party unless such settlement
includes a general release of the Indemnified Party, with no payment by the
Indemnified Party of consideration.
ARTICLE V
MISCELLANEOUS
5.01 NOTICES. All notices or other communications hereunder shall be in
writing and shall be given by registered or certified mail (postage prepaid and
return receipt requested), by an overnight courier service which obtains a
receipt to evidence delivery, or by facsimile transmission (provided that
written confirmation of receipt is provided), addressed to the appropriate party
at the following addresses (or such other address as any party may designate to
the other in accordance with the aforesaid procedure):
(a) if to Alpine:
The Alpine Group, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
(b) if to Kirkbi, at the address set forth on the signature page hereof.
(c) if to PolyVision:
PolyVision Corporation
00-00 00xx Xxxxxx
Xxxx xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, President and CEO
Fax: (000) 000-0000
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All notices and other communications sent by overnight courier service shall be
deemed to have been given as of the second Business Day after delivery thereof
to such courier service, those given by facsimile transmission shall be deemed
given when sent, and all notices and other communications sent by mail shall be
deemed given as of the fifth Business Day after the date of deposit with the
United States Postal Service. As used herein, "BUSINESS DAY" shall mean any day
other than Saturday, Sunday, or any other day when banks in New York City are
required or permitted by law or other governmental actions to be closed.
5.02 BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall become
binding on and inure to the benefit of Alpine and PolyVision upon execution by
such parties. This Agreement shall become binding on Kirkbi and inure to its
benefit, and Kirkbi shall become a party hereto, only if and when it executes
this Agreement, provided that Kirkbi executes this Agreement within 30 days
after the date hereof. This Agreement shall be binding on each party hereto and
any successor of a party in accordance with the following sentence. Neither the
Transferors nor PolyVision may sell, assign, transfer, or otherwise convey any
of its rights or delegate any of its duties under this Agreement, except to a
corporation which has succeeded to substantially all of the business and assets
of such party and has assumed in writing its obligations under this Agreement.
Without limiting the generality of the foregoing, any transferee of PolyVision
Common Stock shall have the rights set forth in Article IV, and such rights
shall be enforceable against PolyVision by such transferees as third party
beneficiaries.
5.03 AMENDMENTS AND WAIVERS. Neither this Agreement nor any term hereof
may be changed or waived (either generally or in a particular instance and
either retroactively or prospectively) absent the written consent of the
Transferors and PolyVision.
5.04 EXPENSES. Each of the Transferors and PolyVision will be responsible
for the payment of all expenses incurred by it in connection with the
preparation, execution, and delivery of this Agreement, any other documents
relating to the transactions contemplated by this Agreement, and the
consummation of the transactions herein described, except that PolyVision shall
reimburse Alpine on demand for Alpine's reasonable costs and expenses in
connection with the preparation and negotiation of this Agreement and such other
documents, including legal fees and expenses and the cost of any fairness
opinion obtained by Alpine in connection with the transactions contemplated
hereby.
5.05 SURVIVAL OF REPRESENTATIONS, ETC. The representations, warranties,
covenants, and agreements made herein or in any certificate or document executed
in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions herein described, regardless
of any investigation made at any time by or on behalf of any of the parties
hereto.
5.06 DELAYS OR OMISSIONS; WAIVER. No delay or omission to exercise any
right, power, or remedy accruing to either of the Transferors or PolyVision upon
any breach or default by the other under this Agreement shall impair any such
right, power, or remedy nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein or in any
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similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.
5.07 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof and all prior
negotiations, discussions, commitments, and understandings heretofore had
between them with respect thereto are merged herein.
5.08 COUNTERPARTS; GOVERNING LAW. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to conflicts of laws rules or principles.
5.09 FURTHER ACTIONS. At any time and from time to time, each party
agrees, without further consideration, to take such actions and to execute and
deliver such documents as may be reasonably necessary to effectuate the purposes
of this Agreement.This Agreement has been duly executed on the date hereinabove
set forth.
12
THE ALPINE GROUP, INC.
By /s/ Bragi X. Xxxxx
------------------------------
Name: Bragi X. Xxxxx
Title: Executive Vice President
POLYVISION CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and CEO
KIRKBI PROJEKT A/S
/s/ Xxxxxx Xxxxxxxxxx Xxxxxxx
By /s/ Xxxxx Xxxxxx
----------------------------------------------
Name: Xxxxxx Xxxxxxxxxx Xxxxxxx/Xxxxx Xxxxxx
Address: Aastvej I
------------------------
DK-7190 Billund
------------------------
Denmark
------------------------
13
EXHIBIT A
POLYVISION PREFERRED STOCK (SERIES B LIQUIDATION PREFERENCE $50 PER SHARE)
--------------------------------------------------------------------------------------------------------------------------
EXISTING: EXCHANGED FOR:
------------------ --------------- ----------- ----------- --------------- ------------------- ------------
SERIES A SERIES B SERIES B
PREFERRED STOCK LIQUIDATION ACCRUED PREFERRED STOCK PREFERRED STOCK COMMON STOCK
(SHARES) VALUE DIVIDENDS (SHARES) (LIQUIDATION VALUE) (SHARES)
------------------ --------------- ----------- ----------- --------------- ------------------- ------------
ALPINE 1,009,177 $25,229,425 $5,532,931 246,000 $12,300,000 -0-
------------------ --------------- ----------- ----------- --------------- ------------------- ------------
KIRKBI 20,076 501,900 110,069 1,951 97,550 102,888
------------------ --------------- ----------- ----------- --------------- ------------------- ------------
TOTAL 1,029,253 $25,731,325 $5,643,000 247,951 $12,397,550 102,888
------------------ --------------- ----------- ----------- --------------- ------------------- ------------
POLYVISION DEBT EFFECTIVE EXCHANGE PRICE
------------------- ------------------- -------------- ------------------------ ------------
EXISTING: EXCHANGED FOR: LIQUIDATION VALUE $25,731,325
------------------- ------------------- -------------- ------------------------ ------------
POLYVISION DEBT ACCRUED DIVIDENDS 5,643,000
(PRINCIPAL AND COMMON STOCK -------------------------------------
INTEREST) (SHARES) POLYVISION DEBT 7,388,940
------------------- ------------------- -------------- ------------------------ ------------
ALPINE $7,388,940 5,171,977 TOTAL $38,763,265
------------------- ------------------- -------------- ------------------------ ------------
KIRKBI - 0 - - 0 - SHARES ISSUABLE 9,407,382
------------------- ------------------- -------------- ------------------------ ------------
TOTAL $7,388,940 5,171,977 EFFECTIVE EXCHANGE PRICE $4.12
------------------- ------------------- -------------- ------------------------ ------------
Exhibit B
---------
Shares of Series B Preferred Stock.
1. Designation, Number and Par Value. The shares of a series of
Preferred Stock shall be designated as "Series B Preferred." The number of
shares which shall constitute Series B Preferred shall be 300,000 shares. Shares
of Series B Preferred shall have a par value of $.01 per share.
2. Ranking. Shares of Series B Preferred shall, with respect to
distribution rights upon the liquidation, dissolution or winding-up of the
affairs of the Corporation and dividend rights, rank senior to all classes or
series of common stock and preferred stock of the Corporation, whether now
existing or hereafter created, other than the Series C Preferred. Shares of
Series B Preferred shall, with respect to distribution rights upon the
liquidation, dissolution or winding-up of the affairs of the Corporation and
dividend rights, rank pari passu with the Series C Preferred.
3. Dividends.
( a) For so long as any shares of Series B Preferred shall be
outstanding and until all shares of Series B Preferred are redeemed by the
Corporation, the holders of shares of Series B Preferred shall be entitled to
receive cumulative dividends at the annual rate of $4.50 per share. Cumulative
dividends on outstanding shares of Series B Preferred shall accrue from the date
of the issuance of such shares (the "Issue Date") through and including the date
of redemption for all such shares. Such cumulative dividends shall be payable
quarterly in arrears on the first day of the months of March, June, September
and December or, in the event such date is not a Business Day, on the first
Business Day immediately following such date. The dividend accrued for any
period which is less than a quarter shall be computed on a pro rata basis for
the actual number of days elapsed in the period for which payable, including the
date of payment. Such dividends shall be paid to the holders of record of the
Series B Preferred at the close of business on the date specified by the Board
of Directors of the Corporation at the time such dividend is declared; provided,
however, that such date shall not be more than 50 days nor less than ten days
prior to the date on which such dividend is payable.
(b) Notwithstanding anything contained herein to the contrary,
no cash dividends on shares of Series B Preferred shall be declared by the Board
of Directors or paid or set apart for payment by the Corporation at such time as
the terms and provisions of any financing or working capital agreement of the
Corporation specifically prohibit such declaration, payment or setting apart for
payment or if such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder or if such declaration,
payment or setting apart for payment would, upon the giving of notice or passage
of time or both, constitute such a breach or default.
( c) So long as any shares of Series B Preferred shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any distribution be made, on any other class or series of
common stock or preferred stock (other than the Series C Preferred) of the
Corporation ("Junior Stock"), nor shall any shares of any Junior Stock be
purchased, redeemed or otherwise acquired for value by the Corporation or by any
subsidiary of the Corporation, directly or indirectly, unless the holder(s) of a
majority of the shares of
Series B Preferred, voting as a class, shall approve such dividend,
distribution, purchase, redemption or acquisition.
4. Liquidation, Dissolution or Winding-Up.
( a) In the event of a voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Corporation, the holders of
shares of Series B Preferred shall be entitled to receive a liquidation value of
$50.00 per share, plus accrued dividends thereon to the date fixed for
liquidation, dissolution or winding up, payable in cash, before any payment to
any holders of any Junior Stock.
( b) If such payments shall have been made in full to the holders
of shares of Series B Preferred, the remaining assets and funds of the
Corporation shall be distributed among the holders of outstanding shares of
Junior Stock, according to their respective rights and preferences. If, upon any
liquidation, dissolution or winding-up of the affairs of the Corporation, the
amounts so payable are not paid in full to the holders of all outstanding shares
of Series B Preferred, the holders of shares of Series B Preferred shall share
ratably in any distribution of assets in proportion to the full amounts to which
they would otherwise be respectively entitled. Neither the consolidation or
merger of the Corporation, nor the sale, lease or conveyance of all or a part of
its assets, shall be deemed a liquidation, dissolution or winding-up of the
affairs of the Corporation within the meaning of this Section 4(b).
5. Voting Rights.
( a) So long as shares of Series B Preferred having an aggregate
liquidation preference of at least $6,200,000 are outstanding, the consent of
the holders of at least a majority of shares of Series B Preferred at the time
outstanding, given in person or by proxy, either in writing without a meeting or
by vote at any meeting called for such purpose, shall be necessary for
approving, adopting or ratifying:
( i) any amendment, alteration or repeal of any of the
provisions of the Certificate of Incorporation or the By-laws of the Corporation
which adversely affects the rights or preferences of the holders of the Series B
Preferred or the authorization, creation or issuance of, or the increase in the
authorized amount of, any stock or any security convertible into any stock;
provided, however, that neither (x) the amendment of the provisions of the
Corporation's Certificate of Incorporation or By-laws so as to authorize, create
or increase the authorized amount of any stock or any security convertible into
any stock ranking junior in all rights and preferences to the Series B Preferred
nor (y) the authorization, creation or issuance of, or the increase in the
authorized amount of, any stock or any security convertible into any stock
ranking junior in all rights and preferences to the Series B Preferred, shall be
deemed to adversely affect the rights of the holders of the Series B Preferred;
( ii) the merger or consolidation of the Corporation with or
into any other corporation other than (A) the merger of a subsidiary into the
Corporation so long as (x) the Corporation is the surviving company and (y) the
rights and preferences of the Series B Preferred remain the same and there are
no classes of stock authorized or outstanding
2
which rank senior to the Series B Preferred in the distribution of assets on any
liquidation, dissolution or winding-up of the affairs of the Corporation or in
the payment of dividends or (B) the merger of the Corporation or a subsidiary
thereof with The Alpine Group, Inc., a Delaware corporation ("Alpine"), or a
successor thereto or subsidiary or subsidiaries thereof;
(iii) a sale of all or substantially all of the assets of
the Corporation;
(iv) any liquidation or dissolution of the Corporation; and
(v) any dividends or distributions on or redemptions or
purchases of any stock other than Series A Preferred or Series B Preferred so
long as the Corporation is in arrears in the payment of dividends on, or in the
redemption of, the Series B Preferred.
(b) Holders of shares of Series B Preferred shall have no voting
rights other than as set forth in this Section 5, in the Certificate of
Incorporation or as mandated in the New York Business Corporation Law in effect
at such time, except that if the Corporation is in arrears in the payment of
dividends in an amount equal to or exceeding four quarterly dividend payments
and until all such arrearages are repaid in full, the holders of the Series B
Preferred, voting as a class, shall b entitled to elect by a majority vote one
director (who may appoint an observer when he is unable to attend meetings) to
the Board of Directors of the Corporation.
(c) Upon and subject to the transfer of record ownership of
shares of Series B Preferred by Alpine or Kirkbi Projekt A/S to any other person
or entity (other than Alpine or an "affiliate" of Alpine, as such term is
defined in Rule 405 of Regulation C under the Securities Act of 1933, as
amended), or any of their nominees, such other person or entity owning shares of
Series B Preferred shall be entitled, in addition to the voting and other rights
set forth in subsections (a) and (b) of this Section 5, to one vote per share
(as adjusted for subdivision, combinations and reclassifications of the Common
Stock (as defined below)) and shall vote together with the holders of Common
Stock and of any other class or series of stock which may similarly be entitled
to vote with the holders of Common Stock as a single class upon all matters upon
which shareholders are entitled to vote.
6. Conversion.
(a) Optional Conversion. Subject to the terms and provisions of
this Section 6, the holder of shares of Series B Preferred shall have the right,
at the holder's option, at any time and from time to time, to convert the shares
of Series B Preferred and all accrued dividends thereon, into fully paid and
nonassessable shares of the common stock of the Corporation ("Common Stock").
The number of shares of Common Stock into which the Series B Preferred may be
converted shall b determined by dividing the total liquidation value and accrued
dividends to be converted by the Conversion Price (as defined below) in effect
at the time of such conversion. The Conversion Price shall be equal to $3.00,
subject to the adjustments set forth in Section 7 (the "Conversion Price").
(b) Partial Conversion. Upon any partial conversion of the Series
B Preferred pursuant to Section 6(a), a new certificate for the unconverted
portion of the Series
3
B Preferred bearing the date of original issue ("Original Issue Date") and
having the same rights and privileges as the Series B Preferred shall be
delivered to the holder.
(c) Mechanics and Effect of Conversion. No fractional shares of
Common Stock will be issued upon conversion of the Series B Preferred. In lieu
of any fractional share to which the holder would otherwise be entitled, the
Corporation will pay to the holder the cash value of any fractional share. To
optionally convert the Series B Preferred into Common Stock pursuant to Section
6(a), the holder shall surrender the Series B Preferred at the principal offices
of the Corporation, together with a written notice (the "Conversion Notice") to
the Corporation of the holder's election to convert. At its expense, the
Corporation will, as soon as practicable thereafter, issue and deliver to such
holder at such principal office, a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled upon such conversion,
together with any other securities and property to which the holder is entitled
upon such conversion under the terms of the Series B Preferred, including a
check payable to the holder for any cash amounts payable as described above in
respect of fractional shares. In the event of any optional conversion of the
Series B Preferred pursuant to Section 6(a), such conversion shall be deemed to
have been made immediately prior to the close of business on the date of the
surrender and delivery of certificates representing the Series B Preferred and
the corresponding Conversion Notice, and the holder shall be treated for all
purposes as the record holder of such shares of Common Stock as of such date.
7. Anti-Dilution and Other Provisions.
(a) Special Definitions. For purposes of this Section 7, the
following definitions shall apply:
(i) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Shares or
"Convertible Securities" (as defined below).
(ii) "Convertible Securities" shall mean any evidence of
indebtedness, shares (other than Common Shares) or other securities convertible
into or exchangeable for Common Shares.
(iii) "Additional Common Shares" shall mean all Common
Shares issued (or, pursuant to Section 7(c), deemed to be issued) by the
Corporation after the date hereof, other than Common Shares issued or issuable:
(1) to officers, directors or employees of, or consultants to,
the Corporation pursuant to stock options outstanding on the
date hereof or stock options granted after the date hereof
on terms approved by the Board of Directors of the
Corporation including a majority of the members of the Board
of Directors of the Corporation who are not officers or
employees of the Corporation, up to an aggregate maximum at
any time equal to 10% of the outstanding Common Shares
(including Common Shares previously issued to such persons);
4
(2) for which adjustment of the Conversion Price is or was made
pursuant to Section 7(f);
(3) upon the exercise of the Common Stock Purchase Warrants
issued in connection with the Securities Purchase Agreement
between the Corporation and the purchasers named therein;
(4) upon the exercise of the warrants issued to Fleet Corporate
Finance, Inc. and First Albany Corporation, or their
respective designees, in connection with certain financing
agreements; and
(5) pursuant to the conversion of the Series C Preferred or any
other series of convertible preferred stock issued to Alpine
or Kirkbi Projekt A/S.
(b) No Adjustment of Conversion Price. No adjustment in the
Conversion Price shall be made in respect of the issuance of Additional Common
Shares unless the consideration per share (determined pursuant to Section 7(e)
hereof) for an Additional Common Share issued or deemed to be issued by the
Corporation is less than the Conversion Price for such share in effect on the
date of, and immediately prior to, such issue.
(c) Deemed Issue of Additional Common Shares. In the event the
Corporation at any time or from time to time after the date hereof shall issue
any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of Common Shares
(as set forth in the instrument relating thereto without regard to any
provisions contained therein designed to protect against dilution) issuable upon
the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Common Shares, subject to the limitations of
Section 7(a)(iii), issued as of the time of such issue or, in case such a record
date shall have been fixed, as of the close of business on such record date,
provided that Additional Common Shares shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 7(e) hereof)
of such Additional Common Shares would be less than the Conversion Price in
effect on the date of and immediately prior to such issue, or such record date,
as the case may be, and provided further that in any such case in which
Additional Common Shares are deemed to be issued:
(i) no further adjustments in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or Common Shares upon
the exercise of such Options or conversion or exchange of such Convertible
Securities;
(ii) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or decrease or
increase in the number of Common Shares issuable, upon the exercise, conversion
or exchange thereof (including any such increase or decrease under or by reason
of provisions designed to protect against dilution), the Conversion Price
computed upon the original issue thereof (or upon the occurrence of a
5
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities (provided,
however, that no such adjustment of the Conversion Price shall affect Common
Shares previously issued upon conversion of the Series B Preferred);
(iii) upon the expiration of any such Options or any rights
of conversion or exchange under such Convertible Securities which shall not have
been exercised, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(1) in the case of Convertible Securities or Options for Common
Shares, the only Additional Common Shares issued were the
Common Shares, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such
Convertible Securities and the consideration received
therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or
not exercised, plus the consideration actually received by
the Corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such conversion or
exchange (provided, however, that no such adjustment of the
Conversion Price shall affect Common Shares previously
issued upon conversion of the Series B Preferred), and
(2) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such
Options, and the consideration received by the Corporation
for the Additional Common Shares deemed to have been then
issued was the consideration actually received by the
Corporation for the issue of all such Options, whether or
not exercised, plus the consideration deemed to have been
received by the Corporation (determined pursuant to Section
7(e)(ii)) upon the issue of the Convertible Securities with
respect to which such Options were actually exercised
(provided, however, that no such adjustment of the
Conversion Price shall affect Common Shares previously
issued upon conversion of the Preferred Stock);
(iv) no readjustment pursuant to clause (ii) or (iii) above
shall have the effect of increasing the applicable Conversion Price to an amount
which exceeds the lower of (i) such Conversion Price on the original adjustment
date, or (ii) such Conversion Price that would have resulted from any issuance
of Additional Common Shares between the original adjustment date and such
readjustment date; and
6
(v) in the case of any Options which expire by their terms
not more than 90 days after the date of issue thereof, no adjustment of a
Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner provided in
clause (iii) above.
(d) Adjustment of Conversion Price Upon Issuance of Additional
Common Shares. In the event the Corporation at any time after the Original Issue
Date shall issue Additional Common Shares (including Additional Common Shares
deemed to be issued pursuant to Section 7(c) but subject to the limitations of
Section 7(a)(iii)) without consideration or for a consideration per share less
than the Conversion Price in effect on the date of and immediately prior to such
issue, then and in such event such Conversion Price shall be reduced,
concurrently with such issue, to a Conversion Price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of Common Shares outstanding immediately
prior to such issue plus the number of Common Shares which the aggregate
consideration received by the Corporation for the total number of Additional
Common Shares so issued would purchase at such Conversion Price; and the
denominator of which shall be the number of Common Shares outstanding
immediately prior to such issue plus the number of such Additional Common Shares
so issued; and provided, further that, for the purposes of this Section 7(d) all
Common Shares issuable upon conversion of the Series B Preferred and all
outstanding Convertible Securities, and upon exercise of all outstanding Options
bearing an exercise price which is lower than the price at which the Additional
Common Shares were issued (or deemed to be issued), shall be deemed to be
outstanding, and immediately after any Additional Common Shares are deemed
issued pursuant to Section 7(c), such Additional Common Shares shall be deemed
to be outstanding.
(e) Determination of Consideration. For purposes of this Section
7(e), the consideration received by the Corporation for the issue of any
Additional Common Shares shall be computed as follows:
(i) Cash and Property. Such consideration shall:
(1) insofar as it consists of cash, be computed at the aggregate
amount of cash received by the Corporation excluding amounts paid or payable for
accrued interest or accrued dividends;
(2) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such issue, as
reasonably determined in good faith by the Board of Directors of the
Corporation; and
(3) in the event Additional Common Shares are issued together
with other shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (i) and (ii) above, as reasonably
determined in good faith by the Board of Directors of the Corporation.
7
(ii) Options and Convertible Securities. The consideration
per share received by the Corporation for Additional Common Shares deemed to
have been issued pursuant to Section 7(c), relating to Options and Convertible
Securities shall be determined by dividing:
(1) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options
or Convertible Securities, plus the minimum aggregate amount
of additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained
therein designed to protect against dilution) payable to the
Corporation upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(2) the maximum number of Common Shares (as set forth in the
instruments relating thereto, without regard to any
provision contained therein designed to protect against
dilution) issuable upon the exercise of such options or
conversion or exchange of such Convertible Securities.
(f) Conversion Price Adjustments for Subdivisions, Combinations
or Consolidations of Common Stock.
(i) In the event the Corporation at any time or from time to
time after the date hereof fixes a record date for the effectuation of a split
or subdivision of the outstanding Common Shares or the determination of holders
of Common Shares entitled to receive a dividend or other distribution payable in
additional Common Shares or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
Common Shares (hereinafter referred to as "Common Share Equivalents"), without
payment of any consideration by such holder for the additional Common Shares or
the Common Share Equivalents (including the additional Common Shares issuable
upon conversion or exercise thereof), then, as of such record date (or the date
of such dividend, distribution, split or subdivision if no record date is
fixed), the Conversion Price shall be appropriately decreased so that the number
of Common Shares issuable on conversion of the Series B Preferred shall be
increased in proportion to such increase of outstanding Common Shares and shares
issuable with respect to Common Share Equivalents.
(ii) If the number of Common Shares outstanding at any time
after the date hereof is decreased by a combination of the outstanding Common
Shares, then, following the record date of such combination, the Conversion
Price shall be appropriately increased so that the number of Common Shares
issuable on conversion of the Series B Preferred shall be decreased in
proportion to such decrease in outstanding Common Shares.
(g) Other Distributions. In the event the Corporation shall
declare a distribution payable in securities of other entities or persons,
evidences of indebtedness issued
8
by the Corporation or other entities or persons, assets (excluding cash
dividends other than extraordinary or special cash dividends) or options or
rights not referred to in Section 7(f)(i), the Corporation shall make provisions
for the holder to receive upon conversion of the Series B Preferred, a
proportional amoun (depending upon the extent to which the Series B Preferred is
converted) of such securities, evidences of indebtedness, assets or such other
rights, as if such holder had converted the Series B Preferred on or before such
record date.
(h) Recapitalization. If at any time or from time to time there
shall be a recapitalization of the Common Shares (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 7), provision shall be made so that the holder shall thereafter be
entitled to receive upon conversion of the Series B Preferred the number of
shares of stock or other securities or property of the Corporation to which a
holder of Common Shares deliverabl upon conversion would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 7 with respect to the rights
of the holder after the recapitalization to the end that the provisions of this
Section 7 (including adjustment of the Conversion Price then in effect and the
number of shares issuable upon conversion of the Series B Preferred) shall be
applicable after that event as nearly equivalent as may be practicable. The
Corporation shall not be a party to any merger, consolidation or
recapitalization pursuant to which the holder would be required to take (i) any
voting securities which would cause the holder to violate any law, regulation or
other requirement of any governmental body applicable to the holder or (ii) any
securities convertible into voting securities which if such conversion took
place would cause the holder to violate any law, regulation or other requirement
of any governmental body applicable to the holder, other than securities which
are specifically provided to be convertible only in the event that such
conversion may occur without any such violation.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 7 and in the taking of all such actions as
may be necessary or appropriate in order to protect the Conversion Rights of the
holder against impairment.
(j) No Fractional Shares and Certificate as to Adjustments.
(i) In lieu of any fractional shares to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the fair market value of one Common Share, as determined
in good faith by the Board of Directors of the Corporation.
(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Price pursuant to this Section 7, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to the holder a certificate
setting forth such adjustment or readjustment and
9
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of the holder,
furnish or cause to be furnished to the holder a like certificate setting forth
(A) such adjustment and readjustment, (B) the Conversion Price at the time in
effect, and (C) the number of Common Shares and the amount, if any, of other
property which at the time would be received upon the conversion of the Series B
Preferred.
(k) Notices of Record Date. In the event that the Corporation
shall propose at any time: (i) to declare any dividend or distribution upon any
class or series of capital stock, whether in cash, property, stock or other
securities; (ii) to effect any reclassification or recapitalization of its
Common Shares outstanding involving a change in the Common Shares; or (iii) to
merge or consolidate with or into any other corporation, or to sell, lease or
convey all or substantially all of its property or business, or to liquidate,
dissolve or wind up; then, in connection with each such event, the Corporation
shall mail to the holder:
(i) at least twenty days' prior written notice of the date
on which a record shall be taken for such dividend or distribution (and
specifying the date on which the holders of the affected class or series of
capital stock shall be entitled thereto) or for determining the rights to vote,
if any, in respect of the matters referred to in clauses (ii) and (iii) above;
and
(ii) in the case of the matters referred to in clauses (ii)
and (iii) above, written notice of such impending transaction not later than
twenty days prior to the shareholders' meeting called to approve such
transaction, or twenty days prior to the closing of such transaction, whichever
is earlier, and shall also notify the holder in writing of the final approval of
such transaction. The first of such notices shall describe the material terms
and conditions of the impending transaction (and specify the date on which the
holders of Common Shares shall be entitled to exchange their Common Shares for
securities or other property deliverable upon the occurrence of such event) and
the Corporation shall thereafter give the holder prompt notice of any material
changes. The transaction shall in no event take place sooner than twenty days
after the Corporation has given the first notice provided for herein or sooner
than ten days after the Corporation has given notice of any material changes
provided for herein.
(l) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued Common Shares solely for the purpose of effecting the conversion of
the Series B Preferred such number of its Common Shares as shall from time to
time be sufficient to effect the conversion of the Series B Preferred; and if at
any time the number of authorized but unissued Common Shares shall not be
sufficient to effect the conversion o the Series B Preferred, in addition to
such other remedies as shall be available to the holder, the Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued Common Shares to such number of shares
as shall be sufficient for such purposes.
(m) Notices. Any notice required by the provisions of this
Section 7 to be given to the holders shall be deemed given if deposited in the
United States mail, first class
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postage prepaid, and addressed to the holder of record at its address appearing
on the books of the Corporation.
(n) Taxes and Costs. The issue of certificates evidencing Common
Shares upon conversion of the Series B Preferred in accordance with the terms
provided herein shall be made without charge to the holders of such shares for
any issue tax in respect thereof or other cost incurred by the Corporation in
connection with such conversion; provided, however, the Corporation shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than that of the
holder.
8. No Other Rights. The shares of Series B Preferred shall not have
any relative powers, preferences or rights, nor any qualifications, limitations
or restrictions thereof, other than as set forth herein, in the Certificate of
Incorporation or pursuant to the New York Business Corporation Law in effect at
such time.
9. Business Day. The term "Business Day" shall mean any day other than
a Saturday, Sunday or other day on which banks in the State of New York are
required or authorized to be closed.
10. Notices. All notices and other correspondence to be delivered to
the holders of Series B Preferred shall be given, unless otherwise indicated, by
first-class mail, postage prepaid, to each holder of record as its address
appears in the stock register of the Corporation.
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