Contract
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF OR IN ACCORDANCE WITH
APPLICABLE LAW.
AMENDED
AND RESTATED WARRANT TO PURCHASE STOCK
Corporation: FOCUS
ENHANCEMENTS, INC.
Number of
Shares:
75,000
Class of
Stock: Common
Initial
Exercise
Price: $0.80
Issue
Date:
February 22, 2008
Expiration
Date: February
22, 2015
THIS
AMENDED AND RESTATED WARRANT (“WARRANT”) CERTIFIES THAT HERITAGE COMMERCE CORP.
or registered assignee (“Holder”) is entitled to purchase the number of fully
paid and nonassessable shares (the “Shares”) of Common Stock of FOCUS
ENHANCEMENTS, INC. (the “Company”), in the number, at the price, and for the
term specified above.
ARTICLE
1.
EXERCISE
1.1 Method of
Exercise. Holder may exercise this Warrant by delivering this
Warrant and a duly executed Notice of Exercise in substantially the form
attached as Appendix 1 to the principal office of the Company. Unless
Holder is exercising the conversion right set forth in Section 1.2, Holder
shall also deliver to the Company a check for the aggregate Warrant Price for
the Shares being purchased.
1.2 Conversion
Right. In lieu of exercising this Warrant as specified in
Section 1.1, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined by dividing (a) the aggregate
fair market value of the Shares being converted or other securities otherwise
issuable upon exercise of this Warrant minus the aggregate Warrant Price of such
Shares by (b) the fair market value of one such Share. The fair
market value of the converted Shares shall be determined pursuant to
Section 1.3.
1.3 Fair Market
Value. If the Shares are traded regularly in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company’s stock into which the Shares are convertible)
reported for the business day immediately preceding the day (by
5:00 p.m. California Time of such day) Holder delivers its
Notice of Exercise to the Company. If the Shares are not regularly traded
in a public market, the Board of Directors of the Company shall determine fair
market value in its reasonable good faith judgment. The foregoing
notwithstanding, if Holder advises the Board of Directors in writing that Holder
disagrees with such determination, then the Company and Holder shall promptly
agree upon a reputable investment banking firm to undertake such
valuation. If the valuation of
such
investment banking firm is greater than that determined by the Board of
Directors, then all fees and expenses of such investment banking firm shall be
paid by the Company. In all other circumstances, such fees and expenses
shall be paid by Holder.
1.4 Delivery of Certificate and
New Warrant. Promptly after Holder exercises or converts this
Warrant, the Company shall deliver to Holder certificates for the Shares
acquired and, if this Warrant has not been fully exercised or converted and has
not expired, a new Warrant representing the Shares not so acquired.
1.5 Replacement of
Warrants. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, or surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.
ARTICLE
2. ADJUSTMENTS TO THE
SHARES.
2.1 Stock Dividends, Splits,
Etc. If the Company declares or pays a dividend on its common stock
payable in common stock, or other securities, or subdivides the outstanding
common stock into a greater amount of common stock, then upon exercise of this
Warrant, for each Share acquired, Holder shall receive, without cost to Holder,
the total number and kind of securities to which Holder would have been entitled
had Holder owned the Shares of record as of the date the dividend or subdivision
occurred.
2.2 Reclassification, Exchange
or Substitution. 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, Holder shall be
entitled to receive, upon exercise or conversion of this Warrant, the number and
kind of securities and property that Holder would have received for the Shares
if this Warrant had been exercised immediately before such reclassification,
exchange, substitution, or other event. Upon the closing of
any sale, license, or other disposition of all or substantially all of the
assets (including intellectual property) of the Company, or any reorganization,
consolidation, or merger of the Company with or into a third party where the
holders of the Company’s securities before the transaction beneficially own, as
a result of such Company securities ownership before such transaction,
less than 50% of the outstanding voting securities of the surviving entity after
the transaction, the successor entity shall assume the obligations of this
Warrant, and this Warrant thereafter shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for such transaction and the Warrant Price shall
be adjusted accordingly. 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
Article 2
including, without limitation, adjustments to the Warrant Price and to the
number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 2.2 shall similarly apply to
successive reclassifications, exchanges, substitutions, or other
events.
2.3 Adjustments for
Combinations, Etc. If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant Price shall be proportionately increased and the number of Shares
for which this Warrant is convertible or exercisable shall be proportionately
decreased.
2.4 No Impairment.
The Company shall not, by amendment of its Certificate of Incorporation or
through a reorganization, 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 under this Warrant by the Company, but shall at all times
in good faith assist in carrying out all the provisions of this Article 2
and in taking all such action as may be necessary or appropriate to protect
Holder’s rights under this Article against impairment.
2.5 Certificate as to
Adjustments. Upon each adjustment of the Warrant Price, the Company
at its expense shall promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect
upon the date thereof and the series of adjustments leading to such Warrant
Price.
ARTICLE
3. REPRESENTATIONS AND
COVENANTS OF THE COMPANY.
3.1 Representations and
Warranties. The Company hereby represents and warrants to the
Holder as follows:
(a) All
Shares that may be issued upon the exercise of the purchase right represented by
this Warrant, shall, upon issuance, be duly authorized, validly issued, fully
paid and nonassessable, and free of any liens and encumbrances except for
restrictions on transfer provided for herein or under applicable federal and
state securities laws.
(b) The
Company’s capitalization is set forth in its most recent filings under the
Securities Act of 1934, as amended, and as of the date of issuance hereof has
not changed materially.
3.2 Notice of Certain
Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon its common stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of
common stock; (d) to merge or consolidate with or into any other
corporation, or sell, lease, license, or convey all or
substantially
all of its assets, or to liquidate, dissolve or wind up; or (e) offer
holders of registration rights the opportunity to participate in an underwritten
public offering of the company’s securities for cash, then, in connection with
each such event, the Company shall give Holder (1) at least 10 days
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights (and specifying the date on which
the holders of common stock will be entitled thereto) or for determining rights
to vote, if any, in respect of the matters referred to in (a) and
(b) above; (2) in the case of the matters referred to in (c) and
(d) above at least 10 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the
case of the matter referred to in (e) above, the same notice as is given to
the holders of such registration rights.
3.3 Registration
Rights. The Shares, or the common stock into which the Shares are
convertible, if any, shall be “Registrable Securities” as such term is defined
under the Amended and Restated Registration Rights Agreement dated as of
February 7, 2008 by and among the Company and the Purchasers named therein
(“Amended and Restated Registration Rights Agreement”), and Company agrees that
upon any registration thereof under such Amended and Restated Registration
Rights Agreement, it shall offer Holder the right to register
the Shares for which this Warrant is exercisable (or the right to register
the common stock into which the Shares are convertible, if any) under any such
registration statement pursuant to which the described Purchasers’
securities covered thereby are registered in accordance with the Amended and
Restated Registration Rights Agreement.
ARTICLE
4. MISCELLANEOUS.
4.1 Term. This
Warrant is exercisable, in whole or in part, at any time and from time to time
on or before the Expiration Date set forth above.
4.2 Legends. This
Warrant and the Shares (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR IN ACCORDANCE WITH APPLICABLE
LAW.
4.3 Compliance with Securities
Laws on Transfer. This Warrant and the Shares issuable upon
exercise this Warrant (and the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) may not be transferred or assigned in whole or
in part without compliance with applicable federal and state securities laws by
the transferor and the transferee.
4.4 Transfer
Procedure. Subject to the provisions of Section 4.3, Holder
may transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) by giving the Company notice of the portion of
the Warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to the
Company for reissuance to the transferee(s) (and Holder, if applicable),
provided that no such notice shall be required for a transfer to an affiliate of
Holder.
4.5 Notices. All
notices and other communications from the Company to the Holder, or vice versa,
shall be deemed delivered and effective when given personally or mailed by
first-class registered or certified mail, postage prepaid, at such address as
may have been furnished to the Company or the Holder, as the case may be, in
writing by the Company or such Holder from time to time.
4.6 Waiver. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.
4.7 Attorneys’
Fees. In the event of any dispute between the parties concerning
the terms and provisions of this Warrant, the party prevailing in such dispute
shall be entitled to collect from the other party all costs incurred in such
dispute, including reasonable attorneys’ fees.
4.8 Governing Law.
This Warrant shall be governed by and construed in accordance with the laws of
the State of Delaware, without giving effect to its principles regarding
conflicts of law.
|
FOCUS
ENHANCEMENTS, INC.
|
|||
|
By:
|
/s/
Xxxxx Xxxxx
|
||
|
Name:
Xxxxx Xxxxx
|
|||
|
Title:
President & CEO
|
|||
APPENDIX
1
NOTICE OF
EXERCISE
1. The
undersigned hereby elects to purchase ____________
shares of the Common Stock of FOCUS ENHANCEMENTS, INC. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
1. The
undersigned hereby elects to convert the attached Warrant into Shares in the
manner specified in the Warrant. This conversion is exercised with respect
to ___________ of the Shares covered by the Warrant.
[Strike
paragraph that does not apply.]
2 Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:
Heritage
Commerce Corp.
Or
Registered Assignee
3. The
undersigned represents it is acquiring the shares solely for its own account and
not as a nominee for any other party and not with a view toward the resale or
distribution thereof except in compliance with applicable securities
laws.
|
HERITAGE
COMMERCE CORP. or Registered
Assignee
|
||
|
(Signature) |
||
|
|
||
|
(Date) |
||
|
|
