Exhibit 10.4
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
440,000 SHARES
Warrant No. L-3 Dated: December 16, 2005
1. Number of Shares Subject to Warrant. FOR VALUE RECEIVED,
subject to the terms and conditions herein set forth, L-1 Investment
Partners LLC (the "HOLDER") is entitled to purchase from Viisage
Technology, Inc., a Delaware corporation (the "COMPANY"), up to Four
Hundred and Forty Thousand (440,000) 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 in connection with the consummation of
the transactions contemplated by the Agreement and Plan of Merger dated as of
November 15, 2005, between Integrated Biometric Technology, Inc , Integrated
Biometric Technology, LLC ("IBT") and the Company (the "IBT MERGER AGREEMENT").
2. Exercisability.
(a) This Warrant shall become exercisable as to (i) Two
Hundred and Eighty Thousand (280,000) Warrant Shares immediately upon issuance
of this Warrant; and (ii) One Hundred and Sixty Thousand (160,000) Warrant
Shares if and when the earnings before taxes, interest, depreciation and
amortization generated by IBT in any of calendar years 2006, 2007 or 2008,
exceeds Six Million Dollars ($6,000,000).
(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), (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:
(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
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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
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 with respect to any particular Warrant Shares (the "SUBJECT
WARRANT SHARES"), at 5:00 p.m., Boston time, on the date that is three
years after the date upon which this Warrant becomes exercisable for
the Subject Warrant Shares.
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
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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 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)
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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.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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:
L-1 Investment Partners, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or at such other address as may have been furnished
to the Company in writing.
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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 IBT Merger 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 ADVISORY 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:
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Name:
------------------------------------
Title:
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Date:
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[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:
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Title:
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[INVESTMENT REPRESENTATION STATEMENT]