Exhibit 10.2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
VIISAGE TECHNOLOGY, INC.
COMMON STOCK PURCHASE WARRANT
1,280,000 SHARES
Warrant No. L-1 Dated: December 16, 2005
1. Number of Shares Subject to Warrant. FOR VALUE RECEIVED,
subject to the terms and conditions herein set forth, Aston Capital
Partners L.P. (the "HOLDER") is entitled to purchase from Viisage
Technology, Inc., a Delaware corporation (the "COMPANY"), up to One
Million Two Hundred and Eighty Thousand (1,280,000) shares (the
"WARRANT SHARES") of the Company's common stock, par value $0.001 per
share (the "COMMON STOCK"), at a price per share equal to Thirteen
Dollars and Seventy-Five Cents ($13.75) per share (the "WARRANT
PRICE"), upon exercise of this Common Stock Purchase Warrant (the
"WARRANT") pursuant to the provisions set forth herein.
This Warrant is issued pursuant to that certain Investment Agreement
dated as of October 5, 2005 between the Company and L-1 Investment Partners LLC
(which assigned its rights and obligations thereunder to the Holder) (the
"INVESTMENT AGREEMENT"). The Holder is subject to certain restrictions and
entitled to certain rights as set forth in the Investment Agreement and that
certain Registration Rights Agreement of even date herewith by and among the
Company and the Holder (the "REGISTRATION RIGHTS AGREEMENT").
2. Exercisability.
(a) Subject to Sections 2(b), 4, 7 and 8, this Warrant shall
be exercisable for that number of Warrant Shares determined by multiplying (i)
the aggregate number of Warrant Shares issuable hereunder by (ii) a fraction,
the numerator of which is the Cumulative Transaction Value (as defined below)
and the denominator of which is $125 million. For purposes of this Warrant, the
"CUMULATIVE TRANSACTION VALUE" as of any given date shall mean the aggregate
Consideration (as defined below) paid to acquisition targets in Qualified
Transactions (as defined below) as of such date. The "CONSIDERATION" paid in a
Qualified Transaction shall be the total fair market value (on the date of
payment) of all consideration paid by the Company to an acquisition target or
its security holders in connection with a Qualified Transaction, plus the
principal amount of any long-term indebtedness for borrowed money of such ----
acquisition target assumed by the Company. The fair market value of any
securities (whether debt or equity) or other property paid to an acquisition
target shall be determined under the merger or other acquisition agreement
between the Company and the acquisition target, or if not provided for therein,
shall be as follows: (i) the value of securities that are freely tradable in an
established public market will be determined on the basis of the average closing
market prices on the twenty trading days prior to the public announcement of the
Qualified Transaction; and (ii) the value of securities that are not freely
tradable or have no established public market, and the value of consideration
that consists of other property, shall be the fair market value as determined in
good faith by the Board of Directors of the Company. A "QUALIFIED TRANSACTION"
shall be of the following: (i) a sale, lease, license, exchange, conveyance or
other disposition of all or substantially all of an acquisition target's
property or business to the Company, it being understood that for purposes of
this clause (i), an acquisition target may be a division or line of business of
any entity (ii) a merger of an acquisition target into, or its consolidation
with, the Company such that the Company is the surviving entity or (iii) any
transaction (including a merger or other reorganization) or series of related
transactions, in which the Company acquires more than 50% of the voting power of
an acquisition target. The Company and the Holder acknowledge and agree that the
acquisition by the Company of Integrated Biometric Technology, Inc. on the date
hereof is a Qualified Transaction with Consideration of $60 million, such that
this Warrant shall be immediately exercisable for 614,400 Warrant Shares on the
date hereof as a result of such acquisition.
(b) Notwithstanding anything herein to the contrary,
immediately prior to a Change of Control, this Warrant shall become fully
exercisable with respect to all the Warrant Shares. For purposes of this
Warrant, a "CHANGE OF CONTROL" shall mean the consummation of any of the
following transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the property or business of the
Company, (ii) the merger of the Company into or its consolidation with any other
entity in which the Company is not the surviving entity (other than a
wholly-owned subsidiary of the Company) or (iii) any transaction (including a
merger or other reorganization) or series of related transactions, in which more
than 50% of the voting power of the Company is disposed of or (iv) individuals
who, immediately after giving effect to the Closing, constitute the Board (the
"INCUMBENT DIRECTORS") cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to such date,
whose election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors then on the Board (either by specific vote
or by approval of the proxy statement of the Company in which such person is
named as a nominee for director) shall be an Incumbent Director.
3. Adjustment of Exercise Price and Number of Shares. The number of
shares of Common Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities or property at the time receivable or issuable upon
exercise of this Warrant) and the Warrant Price therefor are subject to
adjustment upon the occurrence of the following events:
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(a) Adjustment for Subdivisions, Stock Dividends and
Combinations. In case the Company shall at any time subdivide the outstanding
shares of the Common Stock or shall issue a stock dividend with respect to the
Common Stock, the Warrant Price in effect immediately prior to such subdivision
or the issuance of such dividend shall be proportionately decreased, and the
number of Warrant Shares for which this Warrant may be exercised immediately
prior to such subdivision or the issuance of such dividend shall be
proportionately increased. In case the Company shall at any time combine the
outstanding shares of the Common Stock, the Warrant Price in effect immediately
prior to such combination shall be proportionately increased, and the number of
Warrant Shares for which this Warrant may be exercised immediately prior to such
combination shall be proportionately decreased. In each of the foregoing cases,
the adjustment shall be effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be.
(b) Reclassifications, Exchanges, Substitutions, In-Kind
Distributions. Upon any reclassification, exchange, substitution or other event
that results in a change of the number and/or class of the securities issuable
upon exercise or conversion of this Warrant or upon the payment of a dividend in
securities or property other than shares of Common Stock, the Holder shall be
entitled to receive, upon exercise of this Warrant, the number and kind of
securities and property that Holder would have received if this Warrant had been
exercised immediately before the record date for such reclassification,
exchange, substitution, or other event or immediately prior to the record date
for such dividend. The Company or its successor shall promptly issue to Holder a
new warrant for such new securities or other property. The new warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 3 including, without
limitation, adjustments to the Warrant Price and to the number of securities or
property issuable upon exercise or conversion of the new warrant. The provisions
of this Section 3(b) shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events and successive dividends.
(c) Certificate of Adjustment. In each case of an adjustment
or readjustment of the Warrant Price, the Company, at its own expense, shall
cause its Chief Financial Officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall be
carried forward and taken into account in any subsequent adjustment otherwise
required hereunder.
(d) Fractional Shares. No fractional shares shall be issuable
upon exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
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eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full share.
4. Termination. This Warrant shall terminate and no longer be
exercisable at 5:00 p.m., Boston time, on December 16, 2008.
5. No Shareholder Rights. This Warrant, by itself, as distinguished
from any Warrant Shares purchased hereunder, shall not entitle the Holder to any
of the rights of a shareholder of the Company.
6. Reservation of Stock. The Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise or conversion of this Warrant.
Issuance of this Warrant shall constitute full authority to the Company's
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares issuable
upon the exercise or conversion of this Warrant.
7. Exercise of Warrant. Subject to Sections 2, 4, and 8, this Warrant
may be exercised in whole or in part by the Holder, at any time from and after
the date hereof and prior to the termination of this Warrant, by the surrender
of this Warrant at the principal office of the Company, together with the Notice
of Exercise (attached hereto as Attachment 1) and, in the event the Warrant or
the Warrant Shares shall not be registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the Investment Representation Letter (attached
hereto as Attachment 2), each duly completed and executed, specifying that
portion of the Warrant that is to be exercised and accompanied by payment in
full of the Warrant Price by wire transfer or certified check with respect to
the Warrant Shares being purchased. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
Warrant Shares issuable upon such exercise shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full Warrant Shares issuable upon such exercise.
8. Change of Control Transactions. Prior to a Change of Control, the
Company shall send a written notice of the same to the Holder. The Holder shall
have twenty (20) days from the date of such notice to exercise this Warrant in
accordance with Section 7. If within such twenty (20) day period any portion of
this Warrant shall not have been exercised, then, upon the consummation of the
Change of Control, the unexercised portion of the Warrant shall be deemed
forfeited.
9. Charges, Taxes and Expenses. The Company shall cause the issuance
and delivery of certificates for the Warrant Shares to the Holder without charge
for any issue or transfer tax, withholding tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
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respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder. The Holder
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
10. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a new warrant (the "NEW WARRANT"), but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable bond or indemnity, if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe.
11. Transfer of Warrant. This Warrant and the Warrant Shares issuable
upon exercise of this Warrant shall be freely transferable, subject to
compliance with this Section 11, the Investment Agreement, the Registration
Rights Agreement and all applicable laws, including, but not limited to the
Securities Act. If, at the time of the surrender of this Warrant in connection
with any transfer of this Warrant or the resale of the Warrant Shares, this
Warrant or the Warrant Shares, as applicable, shall not be registered under the
Securities Act, the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant or the Warrant Shares
as the case may be, furnish to the Company a written opinion of counsel that is
reasonably acceptable to the Company to the effect that such transfer may be
made without registration under the Securities Act (provided that, in the event
that the Warrant or Warrant Shares are to be transferred to an affiliate of the
Holder, no such written opinion of such Holder's counsel shall be required;
provided further that, the Holder and/or the proposed transferee shall provide
any documentation and/or back-up certificates reasonably requested by counsel to
the Company in order that counsel to the Company may render any opinion as may
be required by the Company's transfer agent), (ii) that the Holder or transferee
execute and deliver to the Company an investment representation letter in form
and substance acceptable to the Company and substantially in the form attached
as Attachment 2 hereto and (iii) in the event that the Holder has elected to
transfer registration rights to such transferee, the transferee shall agree in
writing to be bound by all of the terms and obligations under, and to receive
all of the benefits under, the Registration Rights Agreement as a holder of
Warrant Shares thereunder.
12. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, facsimile (with receipt confirmed by telephone) or nationally
recognized overnight express courier postage prepaid, and shall be deemed given
when so mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
Viisage Technology, Inc.
000 Xxxxxxx Xxxx, Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
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with a copy to:
Xxxxxx, Xxxx & Xxxxxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
or to such other person at such other place as the
Company shall designate to the Holder in writing; and
(b) if to the Holder, to:
x/x X-0 Xxxxxxxxxx Partners LLC
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chairman
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
or at such other address as may have been furnished
to the Company in writing.
13. Amendments. Neither this Warrant nor any term hereof may be amended
or waived orally, but only by an instrument in writing signed by the Company and
the Holder.
14. Governing Law. This Warrant shall be governed by the laws of the
State of Delaware, without giving effect to any conflict of laws principles to
the contrary.
15. Headings. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof.
16. Capitalized Terms. Capitalized terms used in this Warrant but not
otherwise defined herein shall have the meanings ascribed to them in the
Investment Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized representatives as of the day and year first above
written.
VIISAGE TECHNOLOGY, INC.
By:
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Name:
Title:
[SIGNATURE PAGE TO FIRST WARRANT]
ATTACHMENT 1
NOTICE OF EXERCISE
TO: VIISAGE TECHNOLOGY, INC.
1. The undersigned hereby elects to purchase ________________ shares of
the Common Stock of Viisage Technology, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of
$_____________ in full, together with all applicable transfer taxes.
2. Please issue a certificate or certificates representing said shares
of Common Stock, or such other security issuable upon exercise of the Warrant,
in the name of the undersigned or in such other name as is specified below:
----------------------------------
(Name)
----------------------------------
(Address)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
[NOTICE OF EXERCISE]
ATTACHMENT 2
INVESTMENT REPRESENTATION STATEMENT
Warrant Shares (as defined in the attached Warrant)
of
Viisage Technology, Inc.
In connection with the purchase of the above-listed securities, the undersigned
hereby represents to Viisage Technology, Inc. (the "COMPANY") as follows:
(a) The securities to be received upon the exercise of the
Warrant (the "WARRANT SHARES") will be acquired for investment for its
own account; not as a nominee or agent, and not with a view to the sale
or distribution of any part thereof, and the undersigned has no present
intention of selling, granting participation in or otherwise
distributing the same, but subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be within
its control. By executing this Statement, the undersigned further
represents that it does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer, or grant
participation to such person or to any third person, with respect to
any Warrant Shares issuable upon exercise of the Warrant.
(b) The undersigned understands that the Warrant Shares
issuable upon exercise of the Warrant at the time of issuance may not
be registered under the Securities Act, and applicable state securities
laws, on the ground that the issuance of such securities is exempt
pursuant to Section 4(2) of the Securities Act and state law exemptions
relating to offers and sales not by means of a public offering, and
that the Company's reliance on such exemptions is predicated on the
undersigned's representations set forth herein.
(c) The undersigned agrees that until the underlying Warrant
Shares are subject to an effective registration statement, in no event
will it make a disposition of any Warrant Shares acquired upon the
exercise of the Warrant unless and until (i) it shall have notified the
Company of the proposed disposition and (ii) it shall have either (A)
furnished the Company with an opinion of counsel satisfactory to the
Company and Company's counsel to the effect that appropriate action
necessary for compliance with the Securities Act and any applicable
state securities laws has been taken or an exemption from the
registration requirements of the Securities Act and such laws is
available, and the proposed transfer will not violate any of said laws,
or (B) provided such other evidence reasonable satisfactory to the
Company that the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the
Company is highly speculative and represents that it is able to fend
for itself in the transactions contemplated by this Statement, has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investments, and has
the ability to bear the economic risks (including the risk of a total
loss) of its investment. The undersigned represents that it has had the
opportunity to ask questions of the Company concerning the Company's
business and assets and to obtain any additional information which it
considered necessary to verify the accuracy of or to amplify the
Company's disclosures, and has had all questions which have been asked
by it satisfactorily answered by the Company.
(e) The undersigned acknowledges that the Warrant Shares
issuable upon exercise of the Warrant must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from
such registration is available. The undersigned is aware of the
provisions of Rule 144 promulgated under the Securities Act which
permit limited resale of shares purchased in a private placement
subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the
availability of certain current public information about the Company,
the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being through a
"broker's transaction" or in transactions directly with a "market
makers" (as provided by Rule 144(f)) and the number of shares being
sold during any three-month period not exceeding specified limitations.
Dated:______________________
By:
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Name:
---------------------------------
Title:
--------------------------------
[INVESTMENT REPRESENTATION STATEMENT]
